The Let Property Campaign, HMRC’s initiative on tax in the private rented sector, is stepping up its work to ensure private landlords pay the full tax on their rental income.
It has sent out 40,000 letters to landlords suspected of not declaring or under-declaring income, with the threat of severe fines and possible criminal prosecution. HMRC is also encouraging other landlords to come forward with a voluntary disclosure before they receive a letter, after which they face penalties and interest paid from the date the tax is due to the date it is actually paid.
Because the state does not know how many private landlords are operating across England, it is very difficult to judge the scale of possible avoidance. Although HMRC uses various sources of information to identify landlords, including the tenancy deposit schemes and Land Registry, this area highlights another advantage that would come out of a national register of landlords.
Such a register would allow much better central government communication with private landlords and would be the basis of a new approach to the private rented sector which was focused on driving up standards and making private renting professional.
The London Borough of Newham, which has its own borough-wide landlord licensing scheme, warned earlier this year that rogue landlords are avoiding an estimated £183 million in unpaid tax in London alone.
A professional private rented market will include proper tax receipts on rental income and should be a major incentive to regulate the sector. With HMRC standing up to tax-avoiding landlords, it’s time government gave them the data they need.