We have often blogged about the importance of landlords keeping their tax affairs in order and claiming the allowances they are due. From the Government’s point of view there is a much bigger problem – those landlords who do not even declare the income they receive from their property. HM Revenue and Customs believe that there are many people who have failed to declare income from rentals of private and commercial property. Many people might assume that you do not have to pay Capital Gains Tax when you sell a house at a profit but of course this is not always the case. There is an exemption for your main residence but this certainly does not appply to houses bought as an investment. CapitalnGains Tax on property is a comples area, especially if you have lived in the property for part of your period of ownership. Most of our landlord insurance clients will be very well aware of the need to take expert advice on the tax due on thier income and gains.
However, there will be some landlords out there who have allowed their affairs to get in a muddle and the advice to them is clear.
The sooner you make a clean breast of it the better. HM Revenue and Customs have announces that they have specialist task forces ready to take action at people with undeclared rental profits or capital gains.
HM Revenue and Customs recently announced an amnesty for landlords but this still means you have to come forward and pay any taxes (and interest on unpaid tax) you owe. The sooner the better because the penalties for tax evasion are very severe and youu are likely to receive far gentler treatment if you come forward voluntarily.
There is no doubt that the Revenue are taking this whole area very seriously indeed and tax evaders can expect criminal proceedings, fines and even prison sentences. The best advice we can give is to use a specialist accountant with a good track record of acting for property landlords.