HM Revenue & Customs (HMRC) has announced that it is to scrutinise landlords more closely over the coming months, in a bid to track down the £500 million unpaid tax from the lettings sector each year.
The taxation body is to send a letter to 40,000 commercial and residential landlords suspected of paying less tax than they owe.
The letter will request that the landlord makes contact with HMRC to resolve their tax affairs, adding that a large fine or a criminal investigation could result if this is not complied with. A thirty day term is given for landlords to respond before any action is taken, HMRC confirmed.
The taxation office has made attempts in the past to encourage landlords to comply with tax expectations – tens of thousands are thought to be paying the wrong amount of tax – or none at all – on rental income, and no capital gains tax made on second homes.
As well as targeting those landlords with undeclared rental earnings, the body is now also targeting landlords who have filed incorrect tax returns in the past.
An HMRC spokesman told the Telegraph: “All rent from letting out a…property or holiday home has to be declared for income tax purposes. Telling us is simple and straightforward. The message for all landlords owing tax is simple – it is better to come to us before we come to you.”