Let Property Campaign

What is the Let Property Campaign and who is it for?

• The Let Property Campaign is HRMC's new method in helping landlords get their tax right.

• It's designed for landlords who owe tax from letting out residential property either in the UK or abroad.

• The main principle is that if you're a landlord and have undisclosed income, you must inform HMRC of any unpaid tax immediately.

• Once informed, you can have up to 90 days to calculate and pay what you owe

• If you fail to inform HMRC, this can lead to higher penalties or even criminal prosecution

What landlords qualify?

• HMRC have prepared a helpful questionnaire for landlords to check if they need to disclose unpaid taxes as part of this campaign.

• Examples include:

  • renting out a single property

  • renting out several properties

  • renting out a room in your main home which exceeds the Rent a Room Scheme threshold

  • holiday lettings

  • living abroad for over 6 months and renting a property in the UK

  • inheriting a property and renting it out

• Examples that aren't included are:

  • landlords letting out non-residential properties e.g. shop, garage or lock up

  • disclosure of income on behalf of a company or trust

How do I notify and disclose my rental income to HMRC?

• If you're an individual, agent or disclosing on behalf of someone who has died, you can inform HMRC of past underpaid tax.

• First, you must make HMRC aware of your intention to make a disclosure. There is no need to provide details for this stage.

• Once this stage has been completed, you will receive a disclosure reference number.

• You can then disclose information about your own tax affairs or on someone else's behalf.

• As part of the disclosure, you must also pay what you owe. If this is too difficult due to financial circumstances, you can make payment arrangements with HMRC during the 90 day time period given to disclose.

How do I calculate what I owe HMRC and make a formal offer of payment?

• At this point, advice from an independent expert is useful as they can help calculate the amount owed. They'll work out the rental income earned for each year that wasn't declared, subtract allowable expenses and then determine the Income Tax on that profit based on how much your income exceeds your Personal Allowance.

• If some of your business records are missing or incomplete, HMRC asks you to estimate to your best ability what your undisclosed income would have been.

• If you're making a disclosure for undeclared rental income you may also need to apply a penalty rate based on the type of failure (e.g. careless, deliberate, or non-deliberate) and the timing and nature of the disclosure (prompted or unprompted), in line with HMRC’s published guidance.

How many years do I need to disclose?

• This isn't always simple to know and can be useful to get advice on in order to prevent being penalised.

• There are two factors to consider:

  • When HMRC should have been notified about receiving letting income

  • How the error was made

• When to notify HMRC about your letting income

  • The latest date to inform HMRC is by 5th October after the tax year end in which you started to receive letting income

  • A failure to notify on a Self Assessment tax return by this deadline means you must pay what you owe to HMRC for up to 20 years

• What about reasonable care?

  • Reasonable care is taken when you've registered for a Self Assessment tax return by the correct deadline and ensured your tax records were correct but failed to pay the right amount.

  • In this case, you only pay HMRC what you owe for up to 4 years

  • If reasonable care wasn't taken and your actions were deemed careless, you must pay HMRC what you owe for up to 6 years.

• What if I deliberately misled HMRC?

  • If you've paid less tax on purpose, you will be required to pay HMRC what you owe for up to 20 years

How do I pay HMRC?

• Once you've notified HMRC that you intend to disclose your income, you'll need a payment reference number.

• The payment should be sent with the disclosure.

• If you need any assistance you can contact HMRC through the Let Property Campaign Helpline.

What happens when HMRC receives your disclosure?

• You should receive an acknowledgement within 30 days that HMRC have received your disclosure.

• If there is an issue with your disclosure, you will be contacted by HMRC and this could lead to higher penalties if the disclosure is found to be 'materially incorrect'.

• Once your disclosure is accepted, you will receive a letter accepting your offer.

This process might seem daunting, but we have successfully guided clients through it before and are well-prepared to advise you in reaching a satisfactory agreement with HMRC.