The Let Property Disclosure Campaign
The HMRC Let Property Campaign provides an opportunity for landlords who have failed to declare rental income to disclose this to HMRC voluntarily. This scheme allows individuals to settle any outstanding tax liabilities, including interest and penalties, through an online disclosure form. This scheme is to encourage those who have fallen short of their reporting obligations and are unintentionally not declaring their income with HMRC.
In this blog, we’ll guide you through the disclosure process, explaining how you can disclose your rental income to HMRC and avoid the risk of facing hefty fines, penalties, and legal action.
Who is eligible for the Let Property Campaign?
The Let Property Campaign is open to anyone who has not declared any UK rental income to HMRC and has underpaid their tax as a result of this. You must not already be under investigation by HMRC to use this service.
A wide variety of landlords can be eligible for the scheme including those who let out a room in their main home, student let properties, holiday home rentals and non-residents who let out a UK property.
Already received a letter from HMRC?
Some individuals who have untaxed rental income might be prompted by a HMRC letter to use the campaign to report their rental income and pay any tax due. HMRC receive data from numerous sources about rental properties and use the sophisticated ‘Connect’ system to analyse this data. We would always advise that it is always better to disclose before you are prompted.
The Disclosure Facility Process
The disclosure process is as follows:
- Registration – You’ll need to notify HMRC of your intention to make a voluntary disclosure. Within 15 days of notification, HMRC will confirm receipt and provide you with a disclosure reference number (DRN).
- Disclosure – You’ll need to submit your disclosure within 90 days of HMRC confirming your registration. Your disclosure should include details of your previously unreported rental income, as well as any arising tax, interest, and penalty liabilities.
- Payment – If you’re able to, it’s recommended that you make your payment at the time of submission. However, if you’re unable to make full payment, you may be able to arrange a time to pay agreement with HMRC.
How many years of rental income should be disclosed?
HMRC has guidelines for how many previous tax years they may request when seeking disclosure of unreported income. The exact number of years depends on the nature of the disclosure and the behaviour that led to the income or gains being unreported.
HMRC classifies behaviour into three categories: deliberate, careless, and innocent. For deliberate cases, HMRC may request disclosure for up to 20 tax years. However, for innocent cases, the minimum disclosure period is four tax years. If your disclosure doesn’t present all rental income and tax, HMRC may open an investigation to recover the additional tax.
Penalties
The level of penalties imposed by HMRC depends on the behaviour that led to the income or gains being unreported. HMRC will consider whether your disclosure was voluntary, the quality of your disclosure and will consider whether you have planned to ensure that going forward you will continue to disclose your rental income and pay any tax that is due on time.
How Can We Help
At Stewart & Co, we have helped numerous clients navigate the HMRC Let Property Campaign. Our experienced team can guide you through the entire process, from notification through to calculating your rental profits, determining interest owed, and helping you submit your formal offer.
If you believe you may need to submit a digital disclosure, please get in contact today and we would be happy to help assist you.
