LBW Chartered Accountants is warning additional property owners to ensure they have declared income from these properties – as letters from HMRC investigations increase.
Property owners falling foul of HMRC’s enquiries will be forced to pay back the undeclared tax for previous years in addition to a penalty of 30-100 per of that amount plus interest.
And Lee Webster, managing director at LBW, advises that a more lenient fine is often issued if a number of conditions are met.
He said: “Some people don’t realise that they should declare additional properties but due to them making a profit this often results in a requirement to pay tax.
“It’s very simple for HMRC to identify such individuals by cross-referencing landlord data provided by lettings agents, land registry records, and DWP records against its own tax records. We have recently been contacted by a number of individuals who own additional properties and have let them out who required our help.
“The numbers can be significant. For example, for an individual who makes £3,000 profit after deduction of allowable costs, per annum, from renting out a property, can equate to £1,200 of tax depending on their rate of tax. If they have had this property for five years, that’s £6,000 of tax owed in addition to the penalty uplift of between £1,800 and £6,000, not to mention interest.”
Gary Cullen, tax director at LBW, added: “Our aim is to minimise penalties and save money. For most clients we have assisted them in limiting the penalty to 30 per cent, which is the minimum imposed by HMRC at present.
“All we require is for you to inform us immediately of a second property or of a letter received by HMRC and we will do the rest.
“Our team also excel in understanding and applying all allowances and calculations to not only minimise the uplift penalty, but save money on tax.
“We would urge anyone who thinks they may be affected to contact us.”
LBW prides itself on its Tax Save initiative, which includes:
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