PKF warns landlords about new property tax campaign
Leading regional accountancy firm PKF East Anglia is warning buy-to-let property investors not to ignore the taxman, who has just launched a new campaign to recoup back taxes on undeclared rents.
HM Revenue and Customs is sending out new-style 'intervention' letters this week in a bid to avoid lengthy, traditional tax investigations. Accountants and business advisers PKF, which has offices in Ipswich, Norwich and Great Yarmouth, says those receiving the letters need to respond, even if they have not made any profits on their letting.
PKF Tax Partner Peter Harrup says: "We have already seen HMRC use its powers to require banks to provide information regarding specific or unnamed / unknown taxpayers holding offshore bank accounts.
"Now the Revenue is becoming more active in using Government data from Stamp Duty Land Tax returns and other sources to pinpoint individuals who may be letting properties but do not declare rental income on their Self Assessment tax returns.
"While HMRC cannot be certain these individuals have made profits and there is no legal requirement to respond to such letters, ignoring such a letter may be counter productive. Once HMRC has identified a tax risk it is unlikely to let go until the issue is cleared up.
"Over the last few years HMRC has geared itself towards tackling tax evasion and avoidance and it intends to use the information it has to seek out evaders in a systematic fashion across the board. Those who did not receive a letter this week and believe they may have escaped the Revenue's grasp should note that this is only a pilot exercise for ongoing interventions that will start later this year."