Landlords disclosing buy to let and other property investment profits to HM Revenue & Customs (HMRC) may face waits of up to six months to have their disclosures analysed.
HMRC estimates that up to 1.5 million landlords may be underpaying up to £500 million in tax every year. Under the Let Property Campaign, landlords who may owe tax – whether through misunderstanding the rules or deliberate evasion – can come forward and declare any unpaid tax, although they will have to pay possible penalties and interest.
HMRC says it will use information it holds about property rental in the UK and abroad, along with information already held on its digital intelligence system Connect, to identify people who have not yet paid what they owe.
This includes cross-referencing letting agents’ returns with those of their landlord clients. For investors that fail to come forward, higher penalties – or even criminal prosecution – could follow.
HMRC is also launching a new service for UK landlords to help them cope with the new legislation that means they must check the immigration status of potential tenants before agreeing a rental.
The first groups of landlords will be required to undertake the checks from December 2014 under a pilot scheme in the West Midlands with the requirement being rolled out across the rest of the country in 2015.
The new online Ready Rentals system has been created to help landlords who will have to ask people applying to live in one of their properties for proof of their right to reside in the UK. This may be a passport, right of abode certificate, or alternative documents that confirm their immigration status.