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HMRC to crackdown on landlords after just 60K say they owe tax


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I know HMRC always threatens crackdowns, but apparently last year only 60,000 landlords told HMRC that they owed any tax:

https://www.telegraph.co.uk/property/buy-to-let/thousands-fewer-landlords-caught-hmrcs-tax-probe-experts-warn/


Apparently, 60,000 is only 4% or what HMRC was expecting, so it looks like HMRC have a nice big pool of 1.5m landlords to go fishing in! That should keep them fruitfully occupied.

(Not the sort of occupation landlords were expecting).

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4 minutes ago, Mikhail Liebenstein said:

I know HMRC always threatens crackdowns, but apparently last year only 60,000 landlords told HMRC that they owed any tax:

https://www.telegraph.co.uk/property/buy-to-let/thousands-fewer-landlords-caught-hmrcs-tax-probe-experts-warn/


Apparently, 60,000 is only 4% or what HMRC was expecting, so it looks like HMRC have a nice big pool of 1.5m landlords to go fishing in! That should keep them fruitfully occupied.

(Not the sort of occupation landlords were expecting).

No wonder the tax changes for BTL (discussed in the "countdown to leveraged..." Thread) have had a very muted effect. The landlords haven't been paying tax bills at all!

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Seen this threat countless times over the last 10 years. Nothing ever happens. 

I reported 3 x undeclared landlords that I know about just to see what would happen.... Nothing has happened but I'd say it's a good £50k missed from those 3 alone. 

As well as my report they are all second home owners so the information is there. Just not the will. 

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22 minutes ago, highcontrast said:

Whilst good news hopefully, is anyone else absolutely fuming so few are actually even declaring their rental income?

Absolute scum.

We should all be reporting local landlords, chances are they aren't declaring.

Yes, I’m fuming as should any PAYE income taxpayers be.

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34 minutes ago, Mikhail Liebenstein said:

I know HMRC always threatens crackdowns, but apparently last year only 60,000 landlords told HMRC that they owed any tax:

https://www.telegraph.co.uk/property/buy-to-let/thousands-fewer-landlords-caught-hmrcs-tax-probe-experts-warn/


Apparently, 60,000 is only 4% or what HMRC was expecting, so it looks like HMRC have a nice big pool of 1.5m landlords to go fishing in! That should keep them fruitfully occupied.

(Not the sort of occupation landlords were expecting).

WTF. I’m in the 4%. Other landlords suck.

 

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8 minutes ago, dragging boot straps said:

Seen this threat countless times over the last 10 years. Nothing ever happens. 

I reported 3 x undeclared landlords that I know about just to see what would happen.... Nothing has happened but I'd say it's a good £50k missed from those 3 alone. 

As well as my report they are all second home owners so the information is there. Just not the will. 

Write to your MP? 

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This is why I have such great reservations of section 24. It relies on the landlord declaring their income. There is some proper rubbish spouted on here about how this would decimate landlords but it seems not only do HMRC not really feel the need to actually get the tax owed. But it seems the tax really seems to be volentary to declare. I have no confidence in any of HMRC crackdown. They seem like Mark Carney threaten one thing but never actually do it.

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Landlords are normally so over leveraged, I doubt that they have much tax to pay, after mortgage, voids, repairs, losses from a previous bad tenancy, paying the estate agent his cut etc.

If they have any profits, all they have to do is remortgage to reduce taxable profit. The equity released is probably another incentive for them to buy another property...

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12 minutes ago, Badhairday said:

Landlords are normally so over leveraged, I doubt that they have much tax to pay, after mortgage, voids, repairs, losses from a previous bad tenancy, paying the estate agent his cut etc.

If they have any profits, all they have to do is remortgage to reduce taxable profit. The equity released is probably another incentive for them to buy another property...

Profitability not withstanding, you have to declare your income

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33 minutes ago, dragging boot straps said:

Seen this threat countless times over the last 10 years. Nothing ever happens. 

I reported 3 x undeclared landlords that I know about just to see what would happen.... Nothing has happened but I'd say it's a good £50k missed from those 3 alone. 

As well as my report they are all second home owners so the information is there. Just not the will. 

Not how it works.

HMRC assume you are being honest when you  dont declare income.

Before S24 it was possible for a IO BTL LL to borrow ~2m and let out several homes and have *NO* tax to pay.

Post S24 thats not the case.

HMRC have politely asked LL to fill in a return even if theyve got no tax to pay.

Theyve also run a radio campaign informing LL of this and other changes.

They are being very very nice. A LL is a commercial operator. HMRC assume that commercial operators know what they are doing.

HMRC *know* everything about a LL - they have the housing owned, any bank transactions, the mortgage etc etc,.

 

 

 

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1 minute ago, spyguy said:

Not how it works.

HMRC assume you are being honest when you  dont declare income.

Before S24 it was possible for a IO BTL LL to borrow ~2m and let out several homes and have *NO* tax to pay.

Post S24 thats not the case.

HMRC have politely asked LL to fill in a return even if theyve got no tax to pay.

Theyve also run a radio campaign informing LL of this and other changes.

They are being very very nice. A LL is a commercial operator. HMRC assume that commercial operators know what they are doing.

HMRC *know* everything about a LL - they have the housing owned, any bank transactions, the mortgage etc etc,.

 

 

 

Yet still no tax seems to be collected.

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18 minutes ago, Pebbles said:

Yet still no tax seems to be collected.

Not how it works

They need a basis for going out after people.

S24 changes the ruls so that there is tax charge for IO BTL.

HMRC will take a few sample cases and go thru their books.

That gives them a basis to go after the rest.

The headlines have mangled the meaning:

Thousands fewer landlords caught by HMRC’s tax probe – but experts warn of a post-Covid crackdown

Less than 60,000 landlords have told HMRC they owe it tax – only 4pc of the total number the tax office estimated had underpaid.

HMRC know how many , to the ~90%, should be paying tax. They are waiting for the tax returns to be filed.

HMRC expects 1m+ LL to file tax returns. It knows  that number as it has all the details on the mortgage and land registry.

Only 60k did.

HMRC have 20 years to go after tax evasion.

 

 

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38 minutes ago, Badhairday said:

Landlords are normally so over leveraged, I doubt that they have much tax to pay, after mortgage, voids, repairs, losses from a previous bad tenancy, paying the estate agent his cut etc.

If they have any profits, all they have to do is remortgage to reduce taxable profit. The equity released is probably another incentive for them to buy another property...

S24 changed that.

A LL will have to pay at least ~30% of rental income as tax.

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46 minutes ago, Pebbles said:

This is why I have such great reservations of section 24. It relies on the landlord declaring their income. There is some proper rubbish spouted on here about how this would decimate landlords but it seems not only do HMRC not really feel the need to actually get the tax owed. But it seems the tax really seems to be volentary to declare. I have no confidence in any of HMRC crackdown. They seem like Mark Carney threaten one thing but never actually do it.

No, no no no.

HMRC have *everything* - land registry ownership records, mortgage details, LL bank details, tenants bank details.

Its all tracked.

The obligation is for the LL to declare the income.

or else.

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1 minute ago, spyguy said:

No, no no no.

HMRC have *everything* - land registry ownership records, mortgage details, LL bank details, tenants bank details.

Its all tracked.

The obligation is for the LL to declare the income.

or else.

Just because it's tracked doesn't mean they are processing the data or using it?

 

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Patience.

Everytime I think I'm In danger of underpaying/overpaying tax, I report it to HMRC. They seem to confirm everything and can see whatever they want these days. But they can be slow to pick up on things until you prompt them (for instance getting tax back!).

Unless those 96% of landlords are collecting in cash and laundering the money very cleverly, I think HMRC is just biding their time until the data is properly processed and its party time. These rules are still *relatively* new. Might as well wait and give people more time so the scale of the fraud becomes a national scandal.

Edited by Frugal Git
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44 minutes ago, byron78 said:

It's laissez-faire capitalism. Most of you on here champion it. Oh look. You want to state to do more now, don't you? ;)

It’s fraud. NOTHING to do with system.

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34 minutes ago, Frugal Git said:

Might as well wait and give people more time so the scale of the fraud becomes a national scandal.

Granted your point on time and newness but from the off, 96% is a national scandal. Couple this with the pressures on public finances due to Covid and if this is widely publicised I would expect the public, particularly PAYE taxpayers, to be livid. HMRC should be on this from the off.

Is this being reported anywhere else this morning aside from the Telegraph? Not seen anything on the BBC, conveniently...

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Section 24 only applies to those who have the property in their own name. Those LL who sold the houses to ltd co to attract the mortgage interest relief against tax still had to pay sdlt and probably CGT on transfer. Now they are ltd companies they are a lot more transparent to HMRC. Not as easy to disguise the property

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1 minute ago, crazypabs said:

Section 24 only applies to those who have the property in their own name. Those LL who sold the houses to ltd co to attract the mortgage interest relief against tax still had to pay sdlt and probably CGT on transfer. Now they are ltd companies they are a lot more transparent to HMRC. Not as easy to disguise the property

Few have done this.

They cannot afford the extra IRs.

And most BTL mortgages will not lend to ltd Co.

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