Let Property Campaign (LPC) is a nationwide campaign launched by HMRC targeting landlords who are earning rental income from residential properties situated, either in the UK or abroad but have failed to declare it. It provides Landlords with an opportunity to disclose their rental income to HMRC and bring their tax affairs in order with the best possible terms.
- Who can use the Let Property Campaign (LPC)?
- Who cannot apply for Let Property Campaign (LPC)?
- Apply for the Let Property Campaign
- Other Liabilities you should include in your disclosure
- What happens if you cannot pay the full amount
- Let Property Campaign penalties
- From where does HMRC get its information?
Who can use the Let Property Campaign (LPC)?
Residential property landlords can report previously undisclosed rental income to the taxman under the let property campaign. Landlords can apply for let property campaign if they meet the following conditions –
- Landlord earning income from renting out a single property.
- Landlord having multiple properties.
- Specialist landlords, e.g. student or workspace rentals.
- Renting out a room in your main home for an amount more than the threshold (£7,500 annually) limit specified under Rent a Room scheme.
- Living in the UK and renting out an overseas property.
- Living overseas for more than 6 months and renting out a property in the UK
- Holiday lettings.
Who cannot apply for Let Property Campaign (LPC)?
Landlords cannot use this campaign if they fall under the following categories –
- Company or trust.
- Individual renting out a commercial property (non-residential property) such as shop or garage.
Apply for the Let property Campaign
To apply for the Let Property Campaign, the landlord will need to –
- Inform HMRC that they would like to disclose their income under the Let property campaign.
- Inform HMRC about all undeclared income, gains, tax and duties.
- make a formal offer.
- pay what is owed to HMRC.
- provide all the necessary information and any additional information required by HMRC.
HMRC will check the level of help and accuracy of the landlord’s information and then decide the actual benefit that they can provide to the landlords in the form of reduced penalties.
Once the landlord has notified HMRC that they would like to make a disclosure, a grace period of 90 days is provided by HMRC to work out and pay the owed taxes. This grace period initiates after HMRC has provided the reference number for the disclosure in writing.
Other Liabilities you should include in your disclosure
As a condition of participating in the Let Property Campaign, you must disclose all income previously unreported to HMRC in your disclosure, in addition to the income from letting out property. This may include the following:
- Earned income that has not been taxed prior to receiving, such as profits from another business.
- Investment income that is not taxed until it is received, such as interest.
- Income from the renting of non-residential property or land (less the expenses relating to that income).
- Capital Gains on the sale/disposal of investments such as land, property, stocks, shares, bonds, and goodwill.
What happens if you cannot pay the full amount?
When you make your disclosure, HMRC expects you to pay what you owe.
If you are unable to pay the full amount, you must notify HMRC immediately and before submitting your disclosure. This can only be accomplished by joining the Let Property Campaign.
When you call, HMRC will want to discuss your current financial situation with you in order to determine how much and when you should pay. You need to provide the following information to assist HMRC in making their decision –
- Your DRN.
- How and when will you pay HMRC the owed amount.
- Your current weekly or monthly income and outgoings.
- What you own - home, other land and property, investments, vehicles, money in the bank account etc.
- What you owe – credit cards, loans, mortgages.
If you cannot make the full payment, do not submit your disclosure or payment until you speak with HMRC.
Let Property Campaign penalties
Non-disclosure of taxes on rental income would mean landlords risk higher penalties if HMRC opened an enquiry. Under the let property campaign, Landlords can report undisclosed taxes that are due on the rental income of earlier years to HMRC. If the landlord is registered for self-assessment and has made a careless mistake in reporting the income, the maximum period they need to go back is 6 years to correct the error.
The normal penalties regime will apply when the disclosure is made under the campaign. The penalties will depend on why the landlord has failed to disclose the income, whether there was a reasonable excuse, or deliberately missed. The penalty could also be reduced based on the quality of disclosure and the information provided to HMRC.
If HMRC opens an enquiry, they can go back up to 20 years and will charge a higher penalty:
- It could be 100% of the tax owed
- It could be as high as 200%, in the case of offshore related income.
From where does HMRC get its information?
HMRC is targeting landlords who have undeclared income and gains through various campaigns. They have extensive information powers and obtains details from the following sources –
- From the councils that have information about the landlords providing accommodation to the claimants of housing benefits.
- From the legal ownership details mentioned in the land registry.
- HMRC has also acquired powers to obtain information about third parties from the organisations which are engaged in providing services where letting agents or anyone else search for the tenants/organisations providing a similar service.
- Businesses that charge commission for services provided by another party.
- Anyone is handling money on behalf of another person.
- Traditional estate agents and local authorities.
- Internet-based letting services
Therefore, it is advisable landlords use the Let Property Campaign opportunity to disclose their undeclared income or face the risks of higher penalties and interests.
How can DNS help?
- We have significant experience dealing with voluntary tax disclosures and tax investigations as one of the leading firms of Chartered Accountants and Tax Advisers in the United Kingdom.
- We will conduct a background check on your case and identify any issues that require disclosure.
- We will advise on the most appropriate steps to take to ensure a complete disclosure to HMRC and minimise the possibility of follow-up questions from HMRC.
- We will calculate the unpaid tax by taking into account all legitimate claims for tax relief/allowances.
- We will act as a buffer between you and HMRC, removing the need for you to speak with HMRC directly.
- We will advise you on the likely penalty position and evaluate all mitigating factors to help reduce your penalties as much as we can.
- If you wish to appoint us as your property tax accountant, we can assist you with your ongoing tax returns.
If you are a landlord who owes tax on your letting income and would like to bring your tax affairs in order by using the let property campaign, you must contact us before you speak with HMRC. Contact DNS Accountants on 03330886686, or you can also e-mail us at email@example.com