Press Room

5 Dec 2018

HMRC let property campaign

5 December 2018

HMRC has announced an opportunity for individuals with unreported rental income to come forward and disclose past undeclared rental profits.  HMRC estimates  a shortfall of around £500m in tax on undeclared rental profits and have launched the campaign with a simple message – “pay up or face the consequences”.

Details of the scheme can be found here and the main features are as follows:-

  • The opportunity is available to individuals only (i.e.  not companies or trusts).  It applies both to individuals living in the UK and to those who are resident overseas.
  • It is only available with respect to residential property.   Non-residential property does not qualify.
  • Individuals wishing to take advantage of the opportunity should notify HMRC by completing an online form, after which they will have 90 days to make a full disclosure to HMRC.
  • In many cases it will only be necessary to report four years worth of income (for an innocent mistake) or six years (for carelessness).   However, depending on the facts, it may be necessary to go back further e.g.  up to 20 years if HMRC has been deliberately misled.

HMRC are at pains to emphasise that individuals making a disclosure should benefit from the best possible terms, compared to not make a disclosure and being “found out” at a later date, which is likely to result in much higher penalties and other, more severe, consequences.

Individuals wishing to take advantage of this opportunity  should seek professional assistance in order to ensure that their disclosure is full and complete and the facts are properly presented to HMRC such that they can achieve the best possible outcome.

Where the rental income is taxable in another country,  then depending on the facts, the UK tax may be reduced accordingly.   This will not, however, be possible where the property is situated in the UK.   American citizens may for example be faced with double taxation and will need advice on  the mechanism for offsetting the UK tax against their US liability.   This may involve amending  US tax returns already filed, if the rental income has already been reported to the IRS.

Paul Lloyds

Paul is a Partner in the Private Client group at Andersen LLP. He advises wealthy individuals and their businesses on almost all areas of UK and US taxation.

Email: Paul Lloyds