What is Let Property Campaign?
HMRC has introduced the Let Property Campaign opportunity for those landlords who failed to declare the rental income tax for their residential properties, in the UK or abroad.
The UK landlords can make voluntary disclosures to His Majestic Revenue & Customs to get their tax affairs sorted and take advantage of the best possible terms and reduced penalties for the initiative. Once notified, you will have 90 days to work out and pay what you owe.
If you are a landlord and you have undisclosed income, Heighten Accountants’ team of expert property accountants can assist you in bringing your tax affairs up to date with HMRC.
What is the scope of the Let Property Campaign?
The Let Property Campaign is an opportunity open to all residential property landlords with undisclosed taxes where they have:
- Single or multiple properties
- Student or workforce rentals
- Holiday lettings
- Main home rent a room above the threshold
- Abroad living landlords
- Jointly owned properties
This campaign is not open to those landlords who have:
- Non-residential properties such as shops, garages, and lock-ups
- Company or a trust
It is important to note that HMRC has access to information that can easily identify your undeclared rental income. The following two sources are most commonly used by HMRC in finding out such information:
- Letting agents – they are required to report to HMRC the list of landlords who have used their services.
- Stamp Duty Register – HMRC collect information from stamp duty record too
You should seek professional advice and assistance in choosing to make rental income voluntarily disclosure to HMRC under the Let Property Campaign. Early action can save you from hefty penalties. If HMRC launches an inquiry or investigation into your tax affairs, you could face harsher penalties and in worst-case scenarios, it could go to the extent of a criminal conviction.
How does the Let Property Campaign process work?
You or your appointed tax advisor and property accountants can make a full and voluntary disclosure of all unpaid liabilities anytime by notifying HMRC. If you do not step up and HMRC finds out and raises an inquiry then you can usually expect a higher penalty.
When you decide to take part in the campaign, it is advisable to speak first to expert accountants who have experience in dealing with such disclosures. The process of the Let Property Campaign may include the following steps:
- Notifying – informing HMRC that you want to take part in the Let Property Campaign
- Disclosure – providing full details of all undeclared income, gains, tax, and duties
- Calculate & Pay – accurately calculating the tax you owe and pay to HMRC
- Investigation – provide HMRC if they ask you for more information
HMRC will write back to you to state whether they accept your formal offer or reject it. They may also request further information at this point.
Why is it prudent to take part in the Let Property disclosure?
You may have the option to declare your rental income disclosures outside of the Let Property Campaign. You can still make a disclosure and put your tax affairs in order this way, however, the flexible terms offered by the campaign will not be available.
Here are some benefits if you decide to take Let Property Campaign directions:
- Open time option – Unlike previous campaigns, there is no disclosure window under the let property campaign requiring you to disclose by a specific date
- Low risk – notifying HMRC voluntarily reduces the risk of higher penalties
- Opportunity – it is better to come to HMRC and admit any inaccuracies rather than wait until HMRC uncovers those errors
- Favourable terms – take advantage of the best possible terms available to get your tax affairs in order
- Additional bonus – If you have completed tax returns within the appropriate time limits, you only pay for a maximum of 6 years — no matter how many years you are behind with your tax affairs
- Zero Penalties – You may not have to pay any penalty at all but if you do it is likely to be lower than it would be if HMRC finds out you have not paid enough tax
- Make an offer – you can tell HMRC how much penalty you believe you should pay. What you pay will depend on why you have failed to disclose, deliberately or you had simply made a mistake
- Payment plan – If you cannot afford to pay what you owe in one lump sum, depending on your circumstances, you will be able to spread your payments
Where additional taxes are due HMRC will usually charge higher penalties. The penalties could be up to 100% of the unpaid liabilities or up to 200% for offshore-related income. These penalties are relaxed under the Let Property Campaign.
What can be the penalties if you don’t disclose?
Ensure you are certain about what you owe and get things right for the future. If you do not come forward and HMRC finds later that you are behind with your tax, it may be harder to convince them that it was simply a mistake.
The law allows HMRC to go back up to 20 years and in serious cases, HMRC may carry out a criminal investigation. The level of penalties ranges from 0 to 35 percent. A deliberate non-disclosure on a previous tax return is likely to yield a higher percentage than a careless error on a tax return.
What you owe in penalties will depend entirely on how late the disclosure is and the reasons why the income was not declared in the first place. However, if you have not done a tax return at all but were not deliberately trying to conceal this from HMRC, you could pay around 10% in penalties.
Each case has to be looked at individually to determine the level of penalties to offer as part of the disclosure. You should seek professional advice to minimise your penalties exposure.
How can we help you with the Let Property Campaign?
If you are a landlord and have received an enquiry letter from HMRC or you intend to disclose your undeclared income either under or outside of the Let Property Campaign, we have the right expertise to make it a seamless and painless process to give you ultimate peace of mind.
We have dealt with several undeclared income disclosure and helped:
- Employed and individual landlords
- Self-employed and business owners
- HMO and multi-property owners
- Companies, trusts, and furnished lets
- Overseas property entities
- Other income disclosures
Heighten Let Property Campaign Service includes:
- Information Collection and Bookkeeping
- Bank Statement and mortgage interest reconciliations
- Year by year Expenses claims
- Estate agent statements and capital expenses
- Rental, employment, capital gains, and other income review
- Actual Liabilities Calculations (what you owe)
- Tax Minimisation review
- Penalty charge review and mitigation
- HMRC Notification and disclosure (Let Prop Campaign)
- Offer submission to HMRC
- Inclusive help if HMRC requires more information
- Assistance and support if HMRC reject your offer
- Guidance on how to pay HMRC
- Payment plan set-up support
- Dealing with HMRC for all Communication on your behalf
- Assistance on how to get things right in the future
You get a comprehensive service from our one team of accountants and tax advisors.
FAQs for Let Property Campaign
You get only 90 days to collect information, calculate what you owe accurately and submit the disclosure to HMRC. Depending on your circumstances calculating your liabilities could be seriously complicated and time consuming, you may want to get independent professional advice before starting to make a notification.
As a first step you start collecting all available information to work out the total rental income for each year you have previously failed to tell HMRC about. You exclude already reported income for these calculations. If some or all of the properties are jointly owned, you split the profit as per your shares.
Then you collect and process all information to work out the allowable expenses that you incurred on that rental income. You exclude already claimed expenses against other reported incomes. You also list capital expenditure such as costs to install new window, wall extension, new kitchen or loft conversion to make a claim for capital gain tax relief.
You then start preparing your yearly profit and loss by deducting the allowable expenses from your income. This determines your taxable profit. Now you will need to work out how much tax you owe on this profit as per your tax band and personal allowances, there is no National insurance on your rental income.
If you have already told HMRC about some income and are now disclosing additional income for any year you need to make sure that you take this into account in your calculations as well. If your affairs are more complex or if you’re in any doubt please seek professional advice.
If your allowable expenses exceed to your rental income for any tax year then you are not required to include that year in your disclosure as there will be no tax due. You only include details of those years where a tax liability arises that you have not previously told HMRC about.
You are allowed to carry that loss forward and use it to reduce the liability on your rental profits in following years. You can only use such losses against income from rentals and not against any other type of income.
Calculating losses can be complex, such discovery should be discussed with an independent professional. A well-planned loss management exercise can save you in tax and maximise your investment return on the property.
Yes. You can still take advantage of Let Property Campaign if you do not have all the records you need to make your disclosure. You should make your best estimate of the undisclosed income and gains.
You can use your bank statements for the period of your disclosure to calculate the income and expenses. Where the bank statement is not available, you should work out your income by using more recent statements as a guide to your income and expenditure. HMRC may ask you to explain why you could not get copy statements.
HMRC may also ask you to explain how you have worked out any estimates you have used, so you need to keep your calculations. You should keep record for all the future year because HMRC can charge penalties of up to £3,000, If they find in the future that you have failed to keep appropriate records
HMRC expects you to pay what you owe when you make your disclosure. However, if you find it difficult paying the full amount, you can do so by contacting HMRC before you send in your disclosure.
HMRC expect you to have the following information in hand before talking to them:
- How much you intend to pay HMRC liabilities now
- When and how would you pay the balance
- Your current income and outgoings amounts
- Details of your financial commitments including mortgages, loans, credit cards
- Details of your assets including home, savings, other property, vehicles
You are advised to hold the disclosure submission, if you cannot pay the full amount, until you have spoken to HMRC.
Yes. Certain disclosures are unlikely to be accepted when checked by HMRC under the Let Property Campaign. The most common reasons for the rejections may include:
- Inaccuracy - Disclosures that are found to be materially incorrect or incomplete
- Too late – if HMRC has notified their intention to open an enquiry or compliance check before you do so.
- Fraud - Instances involving disclosures where HMRC believes the money that is the subject of the disclosure is the proceeds of serious organised crime such as tax credit and VAT bogus registration and fraud
- Criminal investigations - instances such as an ongoing police investigation
- Previous History - if you were eligible for any past HMRC disclosure opportunity and you did not disclose at that time.
- Another campaign covers you - HMRC would expect you to work out your penalty and the number of years you should pay to reflect deliberate action. If you do not, HMRC may not accept your disclosure. You’ll be in this category if you have not yet come forward and would have been covered by a previous campaign.
HMRC has a strict policy regarding the privacy and confidentiality of tax payers’ personal information. You will be protected under the Human Rights Act. Under the Data Protection Act 1998, HMRC also act as a Data Controller holding information for the purposes specified in their notification to the Information Commissioner.
HMRC may use your information to asses and collect tax, customs, the payment of benefits and to prevent and detect any crime. HMRC may exchange information to and from other organisations, such as other government departments or agencies and overseas tax and customs authorities and/or cross check the information they already have about you, however, it will only be done as the law permits to:
- Confirm the accuracy of information
- Stop or detect crime
- Shield public funds
HMRC will not give information to anyone outside HMRC unless the law permits them to do so.
If you realise you have missed something out after you have submitted your disclosure, you should immediately contact HMRC to make an amendment. If HMRC receives information indicating that your disclosure was incorrect, they have the right to investigate your tax affairs again.
If your disclosure is not what HMRC expected they will continue to look for more information. If they receive additional information from you or any other sources, they will write to you about the information and if necessary reassess and collect any additional tax due. This may result in higher penalties.
Heighten Let Property Campaign process is tremendously simple, efficient, and confidential.
Speak to us
We discuss and understand your unique circumstances and lay out a personalised action plan for you.
Get your proposal
We tailor a bespoke fixed fee proposal to give you full control.
You get relaxed
Delegate your let property disclosure with confidence to our trusted team of experts and relax.
On agreement, we guide you through the whole process from information collection to notification to liabilities calculations to tax minimisation advice to formal offer letters, to make a payment plan and future planning. We take care of everything to make your application and offer a success.
Our team of property tax accountants is up to date with the rules relating to mortgage interest and allowable expense and their practical advice can save you in tax and minimise your exposure to penalties.