A renewed push on taxes by HM Revenue & Customs (HMRC) has resulted in a staggering 83% increase in property investors caught underpaying income tax last year. HMRC managed to claw back £33 million in tax from the 5,429 landlords caught, averaging £6,078 each. This is a 73% increase from the £19.3 million recovered in the previous year.
The amount of fines issued by HMRC also surged by 53% last tax year, totalling £2 million, according to a Freedom of Information request by This is Money. The taxman’s attention had shifted away from landlords during the height of the Covid-19 pandemic, but with the pandemic easing in 2022/23, landlords found themselves under increased scrutiny.
Ben Beadle, chief executive of the National Residential Landlords Association, urged landlords to be aware of their tax liabilities and seek professional advice if in doubt, stating that “HMRC will not accept ignorance as an excuse for non-payment or late payment of taxes.”
HMRC’s Let Property campaign, launched in September 2013, targets landlords who underpay tax on rental income. The campaign has persisted for 10 years, despite its original 18-month planned duration. Under the scheme, HMRC can reclaim up to 20 years of underpaid tax and issue fines up to 100% of outstanding tax, or 200% for cash held offshore. Prosecution is also a possibility.
An HMRC spokesperson explained that the Let Property Campaign offers landlords the opportunity to get up-to-date with their tax affairs and benefit from the best possible terms. They added that during the Covid-19 pandemic, resources were temporarily redirected to support wider government priorities, resulting in a reduction in the number of disclosures made.
