HMRC gives an opportunity to individuals to come forward voluntarily and disclose a previously unknown source of taxable income. Individuals get a chance to sort out their taxes and bring their financial affairs up to date. The Let Property Campaign is an opportunity for landlords who owe tax by the way of letting out residential property, in the UK or abroad, to get up to date with their tax affairs. If you are a landlord and have an undisclosed income, you must notify HMRC about the unpaid tax as soon as possible. You will have 90 days to calculate and pay what you owe.
The LPC is an opportunity open to all residential property landlords with undisclosed taxes. This includes:
• renting out a single property
• renting out multiple properties
• a specialist landlord, e.g. student or workforce rentals
• renting out a room in your main home for more than the Rent a Room Scheme threshold
• living abroad and renting out a property in the UK
• living in the UK and renting a property abroad
• renting out a holiday home even if you use it yourself
Why should you come forward and make a voluntary disclosure?
HMRC is responsible for the collection of taxes, the payment of some forms of state support and the administration of other regulatory regimes including the national minimum wage. They deal with landlords who have an undeclared tax on their undisclosed income. For erroneous tax affairs, it is better for you to go to HMRC rather than HMRC coming to you. HM Revenue and Customs contacting you first can prove to be a grave affair. They only contact you after an elaborative research and have specialists whose sole responsibility is to identify those who are facilitating the ‘black economy’.
Another reason to initiate contact in order to make a voluntary disclosure of your unpaid tax is that HMRC normally charge higher penalties than those they charge if you volunteer to come forward. If you go to them before they come to you then your maximum penalty will be 20% of the tax due. However, if you wait until they come to you then you could be looking at penalties of up to 70% (and can be even more in very severe cases). In some serious cases, HMRC may also choose to launch a criminal investigation against you. Receiving a letter from HMRC stating that you are being invested for an unpaid tax under the LPC can have damaging consequences on your professional and personal lives.
Disclosing to HMRC
Once you intend on making a voluntary disclosure of your unpaid tax, the next step is to NOTIFY HM Revenue and Customs. You don’t have to give details of the undisclosed income or the tax you believe you owe. You just need to notify HMRC stating that you intend to make a disclosure. You will be required to fill in separate disclosures as HMRC necessitates a separate notification for each person.
On being notified, HMRC will assign you your unique Disclosure Reference Number (DRN). You can make a DISCLOSURE once you have your DRN but you must disclose within 90 days of the date you receive your notification acknowledgement.
Depending upon the complexity of your situation, calculating the amount payable could be simple or complicated. You may want to seek professional advice for the same. We at Churchill Tax Advisers specialise in tax law and provide expert advice on all areas of UK and international tax to the general public, accountants, lawyers and solicitors and will expertly guide you through the entire process. Once the income you need to disclose is calculated, work out how much tax you owe on that income. The rates of Income Tax you will pay depend on how much income you earn above your Personal Allowance (the annual amount of tax-free income).
The LPC is an ideal opportunity for property investors to ensure their tax affairs are up to date and an early disclosure will result in lower penalties and interest being payable.
How can we help?
We offer our guidance on making a disclosure under the Let Property Campaign to help minimise your tax liability. Our team of tax investigation specialists consist of tax law experts who possess an in-depth knowledge of the area. They study and analyse your situation and advice you on the best way to approach HMRC to disclose the tax on your undeclared income. We have extensive experience in making a voluntary disclosure to HMRC having assisted numerous clients. From notifying HMRC to the initial disclosure, through to negotiating the final settlement and payment terms, we will guide and manage your voluntary disclosure to get you through the entire process swiftly and effectively.
We will seek to reduce the extent of HMRC’s potential enquiry, significantly diminish the potential financial penalties that could be charged and minimise the chance of HMRC publishing details about you on its ‘Tax Defaulters’ website. With our involvement, we have prevented our clients from being criminally investigated, or worse, prosecuted.
Do not take a letter from HMRC stating that you are being investigated for unpaid tax on undeclared income lightly. This can lead to serious consequences and disrupt your personal and professional life.
If you are contemplating contacting HMRC to disclose your unpaid tax or have received a letter from HMRC asking you to make a disclosure under Worldwide Disclosure Facility or Let Property Campaign, please call our helpline on 0203 5000 853 to speak in confidence with a tax disclosure specialist.