Many landlords who did not report their rental income to HMRC can now disclose their unpaid tax through a ‘let property campaign’. This is true for all non-resident and resident taxpayers, which means that foreign property investors who have not already reported their rental profits in the United Kingdom will have the ability to do so with this campaign. Couples who have unreported profits from a shared property must also file an individual disclosure.
One of the advantages of declaring under the let property campaign is that the fines are less serious than under usual circumstances. The campaign cannot be used to declare taxes for the present or prior tax year; this must be achieved by a self-assessment tax return, which means that people who have not yet applied for self-assessment must register if a person is registered for self-assessment and has received reminders to file tax returns. If an unpaid tax is inside the four-year period for filing tax returns, the individual must report the taxable income on his outstanding tax returns. As a result, the individual will face the standard self-assessment penalty charges rather than the more serious penalties associated with the let property campaign.
If a taxpayer has submitted all of his or her tax returns on time but did not pay sufficient tax due to a reckless error, another advantage of using the let property campaign is that he or she would only be liable for underpaid tax for a period of six years. However, where any payment has been deliberately withheld, tax payable for up to 20 years must be paid. (Note that taxpayers can prefer the contractual disclosure facility over the let property campaign in cases of deliberate behaviour and fraud since the former protects from prosecution.)
If a person would like to come forward to make a disclosure of rental income that could have been disclosed previously, the ability to make the most of the let property campaign could be more useful in certain cases (depending on the individual’s circumstances) and should often be assessed. It is self-motivation for individuals to bring their tax affairs up-to-date, which has more favourable conditions than the case otherwise. Individuals are not required to use the let property campaign to make voluntary disclosures, although they would lose the more favourable terms under that situation.
Unlike previous related projects operated by HMRC, there is actually no time limit for using the let property campaign, and it is still available as of this writing. The campaign is only available to people reporting rental earnings from residential property (not industrial property). It is not available to businesses and organizations, trusts, or individuals who are either are under investigation by HMRC or who have been informed of this.
For more comprehensive advice on the tax years to be declared under the let property campaign, you can call our office on 0800 135 7323 as it may differ according to an individual’s circumstances.