Earlier in the year we sent emails to client’s regarding HMRC’s ‘amnesty’ of the Let Property Campaign – following on from this the group to come under the microscope of HMRC’s latest task force will be property owners who are either letting or selling property and not declaring the income tax or capital gains tax due.
Initially the taskforces will be primarily focused on properties held in the South West of England and South Wales.
It is assumed that HMRC feel that a lot of people have second homes, holiday cottages or rented properties in these areas. Also parts of these areas will have enjoyed significant growth in house prices over recent years.
The taskforce will be looking for two types of undisclosed profits:-
- Taxable gains on sales of properties
- Rental profits
The taskforce is likely to review the Land Registry’s records of properties bought and sold and then match each record to the taxpayer’s Tax Returns for that year.
There could be difficulties in respect of claims to Principle Residence Relief, for the taskforce, but there should be ways of working out from public records who has and who has not lived in a property that has been sold – however as we know HMRC are not infallible.
If a you think that they may have a gain which has not been disclosed to HMRC, then all is not lost. The overall result will invariably be better, in terms of penalties and HMRC’s general attitude, if a late disclosure is made. Also time can be taken to look at all the reliefs available to you, to make sure that any taxable gain returned is as low as possible.
The method of disclosure can be discussed before it is made, but the avenues available include the Let Property Campaign – as mentioned above – which potentially provides better terms for disclosure.
Head of Tax