On 31 May 2012 HMRC announced they would be launching a special task force to recover up to £17m in unpaid tax from private landlords. In recent months, HMRC has been directing more resources to such specialist teams, who use increasingly sophisticated methods, including pooling information from across government departments, to track down those who have been paying insufficient tax. Buy to Let is one of the latest sectors to be targeted.
Initially, the investigation will focus on private landlords in Durham, East Anglia, Leeds, Leicester, Lincoln, Nottingham, Sunderland and York but is likely to be widened if it proves to be effective.
Mike Eland, Director General Enforcement and Compliance at HMRC, said “If you have paid all your taxes you have nothing to worry about. But deliberately evading tax you should be paying can land you not only a heavy fine but possibly criminal prosecution as well. This is not an empty threat – HMRC can and will trackyou down if you choose to break the rules.”
Tax advisers are warning that the crackdown may extend to non-payment of VAT. Ruth Corkin, Head of VAT Services at James Cowper says “Many landlords may not realise that VAT is chargeable on temporary accommodation as HMRC treats it in the same way as hotel or guest house accommodation. Landlords may not be registered for VAT when they should be and so could face a back-dated VAT claim.” Anyone letting their property on a short let basis should ensure they seek professional advice as to whether VAT may be payable.