HM Revenue and Customs targeting multiple property owners
HM Revenue and Customs have made recent announcements that they are setting up a special taskforce to investigate individuals who appear to own more than one property, their reasoning being that they suspect some taxpayers are not declaring income received on let investment properties.
Therefore, if you do have a second property that you are receiving rental income on, it is advisable that you begin to declare this income on your tax return and if you have owned it prior to this particular tax year then you should also declare this income in former years.
HM Revenue and Customs have noted that should they find any individuals that have under-declared their income and therefore underpaid their tax, penalties will be issued based on a percentage of any tax under-declared. Of course, if you own a property that you are letting but that you are actually making a loss on after deduction of mortgage interest, maintenance and other allowable expenses then this loss can be carried forward against future rental profits.
However, you have owned an investment property in the past that was not let and therefore you did not receive any rental income, you are still not safe as any gains made upon the sale of this property should have been declared and tax paid under the Capital Gains Tax rules. Again, under-declaration of tax in these circumstances could face penalties.
However, in both cases, the penalties can be largely avoided by approaching HM Revenue and Customs before you are subject to an enquiry.
If you feel that you are in this situation, please contact one of the advisors at Accountants for Traders who will be more than happy to advise you on your particular circumstances
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