Massive Drop In Tax Contributions From Let Property Campaign
An accountancy firm says there has been a steep decline in tax money raised by a let property campaign encouraging landlords to step forward and tell the HMRC the tax that they owe on their rental properties.
HMRC’s Let Property campaign, attempted to persuade landlords to own up to outstanding tax as well hoping that others would inform them of landlords who are believed not to have disclosed their tax matters, failed badly as it received only 4,330 disclosures in 2020/21.
The steep decline in disclosures from the previous year was 42 per cent lower which came to light when the accountancy firm requested A Freedom of Information request, which showed that the tax ‘clawed back’ plummeted from £34m in 2019/20 to around £17m in 2020/21.
When the Let Property campaign first saw the light in 2014, HMRC estimated that as many as 1.5m landlords owed tax and encouraged landlords to disclose tax owed or face fines.
Zena Hanks, a partner in a private wealth team of the accountancy firm, states: “HMRC knows an increasing amount about taxpayers and their behaviours from a variety of sources and, as Making Tax Digital becomes the default for most taxpayers, its hand will be strengthened significantly.
“HMRC’s use of technology to home in on suspected unpaid tax is only going to increase, with data and information availability improving all the time, and the direction of travel is likely to be an ever greater expectation, even demand, for tax to be paid in real time.
“Accurate record keeping is essential, as is planning ahead for the cashflow implications of real time payments.
“Landlords should start making plans now as to how they intend to manage the requirements of Making Tax Digital to ensure the switchover is as seamless as possible and to avoid the ire of HMRC.”