Buy to let landlords to feel the wrath of the taxman
HM Revenue & Customs (HMRC) is to launch a blitz on the buy to let sector in a bid to recover money from tens of thousands of landlords who have failed to declare rental income, made undeclared capital gains from property sales and claimed too much tax relief.
Tax officers will be given the authority to impose financial penalties backdated for up to six years, equalling the value of the unpaid tax plus interest.
Banks, tenants and letting agents will be asked to supply information on rogue landlords who have not declared themselves as property owners or falsely claimed deductions for mortgage payments.
The number of rogue landlords is estimated at about 80,000, around 20% of the total of 400,000 buy to let mortgage holders in the UK.
One landlord, Mark Sullivan of Essex, said that he was genuinely confused by some of the legislation surrounding buy to let. “I am not allowed to claim deductions for mortgage repayments on the capital I’ve borrowed.
“However, I was unaware that my buy to let mortgage had capital repayment elements so I did make a claim. I have sorted the matter with HMRC now, but it just shows that landlords need to be on the ball when they go into this business.”