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November 8, 2023
A north east tax expert is advising local landlords to make sure their financial affairs are fully in order in advance of a tax blitz on the region’s property rental sector.
HM Revenue & Customs has formed six new task forces which are aiming to collect around £23m from people working in different industries and different parts of the country who are perceived to be paying the wrong amount of tax on their income.
One of the new taskforces will be specifically addressing the property rental market in north east England, and Anthony Andreasen, Head of Tax at RMT Accountants & Business Advisors, is recommending that anyone who thinks they might fall under the spotlight should take proactive steps to ensure they have their tax affairs, entirely up to date and complete.
HMRC taskforces bring together various compliance and enforcement teams for intensive bursts of activity targeted at specific sectors and locations where there is evidence of high risk of tax evasion, and according to their figures, HMRC is on target to collect more than £50m as a result of the taskforces launched in the last tax year.
Whilst the north east taskforce will target both the commercial and private sides of the property rental business, it is expected that it will private landlords who will come under most scrutiny, even if they only have a very small property portfolio.
Anthony says: “Even accounting for the difficulties that the property market has experienced recently, there are still thousands of private landlords operating in the north east, and with mortgage interest rates remaining at a very low rate, the likelihood is that many of them are making a profit on the rents they receive, which makes them especially interesting to HMRC.
“The financial liabilities faced by commercial landlords should be clearly recorded in their accounts, but with private landlords, the taxman can only go on the information they provide themselves and there is scope there for some people not to fully report the income they receive.
“There are also a number of common misconceptions about taxation and tax relief in the property rental market. It’s widely believed, for example, that if you’re not making a profit on rentals, then there’s no need to report that you’re receiving anything, whereas in fact there’s an imperative to highlight this money as an additional potential income stream.”
Anthony is advising local landlords to make sure all their rental records are fully up-to-date straight away, and to prepare themselves for the questions they might be asked as part of any investigation.
He continues: “Paperwork like rental contracts and mortgage statements would be collated for review as required, and if you’re using an agent to look after your property on your behalf, make sure they’re equally as prepared as you are for any information requests that come in.
“With the Government focused on bringing in as much tax revenue as possible to increase the amount coming into the Treasury, HMRC will be executing this north east campaign exercise with a great deal of vigour, and not being properly prepared for what this might entail could end up costing landlords a great deal of both time and money.”
HMRC have now launched over 30 taskforces since May 2011 to make rapid inspections of various trades and professions and more can be expected over the coming months.
RMT provides the full range of financial and business advisory services through its Specialist Tax, Recovery & Insolvency, Corporate Finance and Medical divisions, for further information of confidential advice please contact Anthony Andreasen 0191 2569500