BUY-TO-LET investors have been warned to keep their rental income records up-to-date in the face of a new tax clampdown.
HM Revenue & Customs (HMRC) is looking to recoup revenue lost through tax avoidance and evasion in rental income and has intensified the spotlight on landlords.While it already requests details of rental income and property sale revenue from local authorities, its Stamp Office and letting agents, that information will now be data matched to draw out those who don't appear to have made the appropriate tax returns.
Where evidence is uncovered of untaxed rental income and gains, HMRC officers will have the power to inspect records at the business premises, which in the case of some landlords can include private residences. HMRC is taking the buy-to-let market seriously in its clampdown on tax evaders.
It's crucial to notify HMRC of any new source of taxable income, including rental income, as soon as possible.
If landlords do realise they have made a mistake they should take tax advice immediately and contact HMRC. The voluntary disclosure of any omission is looked upon favourably by HMRC and a better tax position can be frequently be obtained.