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November 8, 2023
Residential landlords across the north east are being targeted again by the taxman, this time in a new campaign designed to recoup undeclared profits on the sale of second homes.
HMRC’s new Property Sales campaign aims to claw back any unpaid capital gains tax (CGT) from people selling property that is not their main residence, including both buy-to-let investments and holiday homes in the UK and overseas.
It’s the second time in less than a year that HMRC has made a move to maximise the returns it receives from the region’s residential landlords, after it set up a dedicated task force to target the north east property rental market last summer.
Anthony Andreasen, Head of Tax at Gosforth-based RMT Accountants & Business Advisors Ltd, is recommending that anyone who thinks they might be targeted by this new campaign should take proactive steps to ensure they have their tax affairs entirely up to date and complete. This is a chance to get things right now and know exactly how much it will cost to sort out your tax for earlier years.
Under the new Property Sales campaign, individuals have until 9 August to disclose any unpaid CGT on property sales, with any tax owed being paid by 6 September.
Sellers who make a voluntary disclosure are likely to receive a lower penalty compared to those whom HMRC approach directly, with the latter potentially being liable for more serious penalties or even criminal prosecution.
Anthony Andreasen is now advising local landlords to make sure all their rental records are fully up-to-date straight away, and to consider how they would respond if their property dealings come onto the taxman’s radar.
He says: “The property boom that we experienced in the years before the economic downturn means that hundreds of people across the north east either own two or more properties, or have owned second homes until recently.
“The financial liabilities faced by commercial landlords are clearly recorded in their accounts, but the taxman only has the information they receive from private landlords to go on, and there is scope for some people not fully reporting the income they receive.
“HMRC is now saying it will use information it holds about both domestic and overseas property sales to identify people who have not paid what they owe, with their main message being that ‘it’s better to come to us before we come to you,’ which, from a financial point of view, very much holds true.
“The pressure is getting ever greater for HMRC to maximise the revenues it brings into the Treasury, with the practical upshot that it will execute this and all its other campaigns with real rigour, and not being properly prepared for what this might entail could end up costing landlords a great deal of both time and money.”
RMT provides the full range of financial and business advisory services through its Specialist Tax, Recovery & Insolvency, Corporate Finance and Medical divisions. For more information, please visit www.r-m-t.co.uk or contact Anthony Andreasen 0191 256 5000