There is a warning that the HMRC’s Let Property campaign, which received huge publicity and attention for some years, has so far had only very limited impact - and that the tax authorities are still to target buy to let as a result.
Accountancy firm Saffery Champness, using a Freedom of Information request, has discovered that the Let Property campaign has so far led to disclosures from only three per cent of the landlords originally anticipated.
Back in 2013 the then-coalition government launched Let Property estimating that up to 1.5m landlords had underpaid or failed to pay up to £500m in tax in 2009 and 2010 alone
Those originally targeted included people who own more than one property, specialist landlords who rent to students, people with holiday lets and those who let HMOs.
In the five years since the campaign started, just 35,099 people have made voluntary disclosures to HMRC, only 2.3 per cent of the individuals originally identified, while of the estimated £500m in underpaid taxes a mere £85m has been recovered.
As a result, says the firm, the tax authorities still have work to do.
“From the outset, the Let Property Campaign was always looking much more widely than just traditional landlords. It also targets those who may have become accidental landlords – such as those with holiday lets or multiple occupations” says James Hender, head of private wealth at Saffery Champness.
“The tax system is becoming more complex and the burden is shifting further towards the taxpayer: this inevitably means individual mistakes and misunderstanding can happen. Looking at the data from the FOI, of the large number of tax payers who stated that they had either failed to notify HMRC of their original liabilities or hadn’t taken reasonable care, many would likely have been unaware that they owed anything at all" he continues.
“According to HMRC’s estimates there are clearly many more landlords who have additional tax to pay, but have yet to come forward. If this is the case, then these people would be well advised to contact the taxman sooner rather than later.
“HMRC have been tightening the net on non-compliance and there are increasingly few opportunities for taxpayers to mitigate the risk of an investigation. This campaign is one of the few that remains open but, with the Common Reporting Standard online and the Failure to Correct penalty system in place (both of which will affect owners of properties overseas) it is likely to remain that way for only so long.”
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What the article failed to understand is although one may have more than one properties, it does not mean that it is making money. Hmrc is purely on the hunt for revenues with huge penalties to increase revenues much needed for brexit. It is incomprehensible that such huge penalties are given despite no tax are due . More fleecing off the citizens instead of more policies to increase income from outside uk to cope with the revenues or the lack of it to cover the debts of our country
It is perfectly possible to have multiple residential properties let to lodgers.
Obviously only one RFR allowance is allowed.
There is no law that prevents anyone having as many resi oroperties as they wish.
If you need a mortgage and your income can support 5 resi mortgages then you may do so.
As a live-in LL you can live at each one of these properties for as many days in a month as you wish.
You may have lodgers at each of these properties.
S24 DOESN'T apply to the mortgage interest as the lodgers are NOT tenants.
A honeowner with 5 resi properties would need to spend a minimum of 1 day per month at each of the 5 properties to comply with resi insurance conditions.
As such these properties will only have one lodger staying at an alleged low rent.
Tax on such low levels of lodger rent will be rather small.
There is simply no way that Big Brother Connect Computer can detect the numbers of lodgers at a resi property or how much lodger income is being received.
LL are naturally migrating away from the conventional taxable business models and are using lodgers as a methodology to beat HMRC perfectly legally.
It now rarely makes sense to use an AST as the letting model.
Lodgers are the way to go.
This lodger model is great for single lodgers but a nightmare for those tenants who need to rent a whole property.
Rarely will a live-in LL allow lodger couples.
Providing a live-in LL has no more than 3 single lodgers in a 4 bed property then that avoids Mandatory HMO licensing.
The LL always has his own room at each of the resi properties.
Many LL could adopt this lodger strategy by selling off or converting to resi mortgages using lodgers as occupants.
Any tax bill would substantially reduce.
Most LL though only have 1 extra property.
They will adopt the lodger strategy even though it is more hassle sourcing lodgers than tenants.
Lodgers are far more tax efficient and will result in far fewer tax receipts for Govt.
i think you are only allowed 2 lodger at most from 2 separate household, not 3 lodgers
Hi There, I need more information on lodgers and tax ect.I have a buy to Let and need to use this model in future, who is best to discuss or pay for this information?
No wrong you can have 3 seperate persons on 1 tenancy agreement and not be registeted as an HMO.
The council charged me for 5 years as an HMO and then when up fir renewal changed their own stupid rules and said no longer required. I asked for the 5 years of licence fee back but that fell on deaf ears. Useless hopeless clueless council.
you need to write to them and then ask for a higher up authority to complaint. i had checked with banes hmo office and was told one landlord can only have 2 lodgers and once you hit 3 lodgers, its a hmo and you lose your rights as live in landlord and hmo regulations take precedence
I agree, an HMO is when 3 or more unrelated people live in one home so LL & 2 others. From comments in other threads I see that Paul has switched from being a conventional LL to the 'Rising Damp' model. I look forward to seeing him, in many years time, on the set of Death in Paradise whenever the current police commissioner decides to retire.
I agree, an HMO is when 3 or more unrelated people live in one home so LL & 2 others. From comments in other threads I see that Paul has switched from being a conventional LL to the 'Rising Damp' model. I look forward to seeing him, in many years time, on the set of Death in Paradise whenever the current police commissioner decides to retire.
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