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

[byron78]

1 minute ago, Killer Bunny said:

But Capitalism is set up for the 90%.

Hahahaha. Of course it is.

That's why you 90% have got richer this past decade and not just us lot, eh?

[ForGreatLager...]

3 hours ago, spyguy said:

HMRC do not look to jail people.

They look for unpaid tax.

Thwy do not let you off unpaid tax.

I’m not going to go into detail, but someone I know is currently in prison for trying to be clever with tax. Along with the stretch inside, they’ve had everything they own taken to repay what they owe. If you take the pi55, HMRC will come after you. 

[spyguy]

5 minutes ago, ForGreatLager... said:

I’m not going to go into detail, but someone I know is currently in prison for trying to be clever with tax. Along with the stretch inside, they’ve had everything they own taken to repay what they owe. If you take the pi55, HMRC will come after you. 

Well, whats tends to happen is that they'll ask you for details.

If you mess them about they'll take you to court.

If you fail to provide the court with details then you'll be jailed for contempt.

I now of one person who ended up like that.

Handed over the details after 1 month inside.

For 99% of tax cases you wont go to jail - providing youve not done something really illegal and you cooperate.

[erat_forte]

51 minutes ago, Killer Bunny said:

But Capitalism is set up for the 90%.

Ah yes, the 90% who own all of the capital and resources, and lord it over the 10% who are landless and have no inherited capital or resources. Yes that makes a lot of sense and explains why the vast majority of people are so wealthy and successful that they don't need to work for salary or wages.

[Killer Bunny]

Oh stop being silly. The 10% lord it over the 90%. Obviously.

[erat_forte]

3 minutes ago, Killer Bunny said:

Oh stop being silly. The 10% lord it over the 90%. Obviously.

So they're meant to be grateful for being lorded over, then?

[msi]

35 minutes ago, erat_forte said:

Ah yes, the 90% who own all of the capital and resources, and lord it over the 10% who are landless and have no inherited capital or resources. Yes that makes a lot of sense and explains why the vast majority of people are so wealthy and successful that they don't need to work for salary or wages.

Brilliant Sarcasm!  Amazed some didn't get it

[dtl]

I have multiple colleagues who got caught up in tax avoidance schemes.

I also have had several colleagues who for one reason or another have fallen the wrong side of HMRC with respect to undeclaring income.

So I have seen this sort of thing play out several times now.

The way I see it is;

Tax inspectors initially have will have little to no role in how this will play out for landlords and hence it has nothing to do with how busy tax inspectors are, or are not.

By the time the tax inspector comes knocking it is too late and a landlord will be regretting their actions.

The inland revenue system already knows who should have completed a tax return with respect to earnings from UK property rental, they also know who then probably owes tax on this income.

Apart from anything else the inland revenue has a 100 million pound computer system that is designed to autonomously gather this sort of information from the multiple databases the system has access to.

What happens next is someone at the inland revenue presses a button and tens of thousands of letters get sent out alerting these people that they should have completed a tax return.

This will be the last chance to comply.

If they then fail to file a tax return, or fill in the tax return incorrectly they have committed tax fraud/evasion.

There is no defence of; “oops I forgot”, “I did not understand” etc, etc.

This has played out thousands of times before, there is nothing new to be tried here.

By law the responsibility of correctly reporting income sits with the taxpayer, 100%.

The tax inspector becomes involved when there is still no completed tax return or the returned tax return is not correct, and tax fraud has now been committed.

Ultimately tax fraud can result in a jail sentence dependent on how far the landlord decides to push his luck at this point.

However, more likely in the situation when the tax inspector appears and the landlord finally takes advice from an accountant or solicitor they will now decide to sensibly comply and Jail is avoided.

What does result is fines and interest payments which will probably be at least double the amount of tax that was due.

 

 

[Killer Bunny]

5 hours ago, erat_forte said:

So they're meant to be grateful for being lorded over, then?

Socialism for the rich aka what we have

[crazypabs]

11 hours ago, spyguy said:

HMRC do not look to jail people.

From First hand experience, i believe if they get a conviction they get a financial bonus

[markyh]

16 hours 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. 

Good to hear, if they cant catch tax evaders (or be bothered) for static well documented provable assets such as rented houses, there is little chance of them knowing about and chasing CGT tax on completely off the radar Cryptocurrency sales into FIAT.  And i could be looking at a six figure CGT bill in less than 18 months time. 

[Killer Bunny]

5 hours ago, Killer Bunny said:

Socialism for the rich aka what we have

 

[dragging boot straps]

7 hours ago, markyh said:

Good to hear, if they cant catch tax evaders (or be bothered) for static well documented provable assets such as rented houses, there is little chance of them knowing about and chasing CGT tax on completely off the radar Cryptocurrency sales into FIAT.  And i could be looking at a six figure CGT bill in less than 18 months time. 

It's interesting you write this. I may or may not have come to similar conclusions regarding similar things. 

[dragging boot straps]

After what has just happened with the loan charge scheme(basically let off for 10 years) then I'm not holding my breath of HMRC chasing this properly.

Amateur landlords have been getting away with it since the mid 90s. The legal action will cite lack of chasing as an issue and then only say tax from 2025 is due. 30 years tax free gains. Nice. 

[dtl]

7 hours ago, markyh said:

Good to hear, if they cant catch tax evaders (or be bothered) for static well documented provable assets such as rented houses, there is little chance of them knowing about and chasing CGT tax on completely off the radar Cryptocurrency sales into FIAT.  And i could be looking at a six figure CGT bill in less than 18 months time. 

It is nothing to do with them not being bothered and more to to do with who they can easily catch.

I suspect most landlords not declaring income from rentals will be easily caught, 90% plus.

The truth is most people who underpay tax are bad at it and get caught.

Whilst one might be getting away with it now, in the future it will become increasingly hard and then when one gets caught you are also probably on the line for all the earlier years. As an earlier poster has already pointed out the inland revenue can easily investigate you 20 years into the past. 

The vast majority of landlords have left a trail of electronic fingerprints, if the inland revenues system has not already identified them it probably soon will.

Gone are the days where a tax inspector had to trawl through records/databases etc to understand a individuals tax liability.

Nowadays it is all electronic. The HMRC Connect system expands its reach further every year.

For example when someone receives a letter from the inland revenue telling them that they should have submitted a tax return,  telling them that this has now cost them £x in fines and will cost them £y a month in further fines until the tax return is received,  there has been no human involvement from HMRC at this point, it is all computerised.

A human tax inspector from HMRC only gets involved at the later stages when the taxpayer is really pushing his luck.

There is a lot of rubbish talked about avoiding taxes, mostly by people who are currently not correctly paying them. It works until it doesn't work anymore and then often it is a complete financial catastrophe. I have seen this play out multiple times. 

 

 

[dtl]

8 minutes ago, dragging boot straps said:

After what has just happened with the loan charge scheme(basically let off for 10 years) then I'm not holding my breath of HMRC chasing this properly.

Amateur landlords have been getting away with it since the mid 90s. The legal action will cite lack of chasing as an issue and then only say tax from 2025 is due. 30 years tax free gains. Nice. 

I know several people who have had to pay loan charges. One person I know had to re-mortgage his family home to pay a £300K bill.

There have also been several documented cases of loan charge related suicides so onerous has the bill and associated fines been.

 

[Innkeeper]

3 minutes ago, dtl said:

It is nothing to do with them not being bothered and more to to do with who they can easily catch.

I suspect most landlords not declaring income from rentals will be easily caught, 90% plus.

The truth is most people who underpay tax are bad at it and get caught.

Whilst one might be getting away with it now, in the future it will become increasingly hard and then when one gets caught you are also probably on the line for all the earlier years. As an earlier poster has already pointed out the inland revenue can easily investigate you 20 years into the past. 

The vast majority of landlords have left a trail of electronic fingerprints, if the inland revenues system has not already identified them it probably soon will.

Gone are the days where a tax inspector had to trawl through records/databases etc to understand a individuals tax liability.

Nowadays it is all electronic. The HMRC Connect system expands its reach further every year.

For example when someone receives a letter from the inland revenue telling them that they should have submitted a tax return,  telling them that this has now cost them £x in fines and will cost them £y a month in further fines until the tax return is received,  there has been no human involvement from HMRC at this point, it is all computerised.

A human tax inspector from HMRC only gets involved at the later stages when the taxpayer is really pushing his luck.

There is a lot of rubbish talked about avoiding taxes, mostly by people who are currently not correctly paying them. It works until it doesn't work anymore and then often it is a complete financial catastrophe. I have seen this play out multiple times. 

 

 

Thanks for your posts on this subject.  Until recently it was ‘relatively’ easy for landlords not to pay due taxes.  Often the amounts due were relatively small anyway so HMRC would not have put many resources into collecting minor amounts.

Section 24 and the HMRC Connect system have changed the game completely.  Much more tax due from the average LL and a computer system which reaches far into an individual’s financial transactions.

They might have got away with it for years but that time is now coming to an end...

 

[Mikhail Liebenstein]

6 minutes ago, Innkeeper said:

Thanks for your posts on this subject.  Until recently it was ‘relatively’ easy for landlords not to pay due taxes.  Often the amounts due were relatively small anyway so HMRC would not have put many resources into collecting minor amounts.

Section 24 and the HMRC Connect system have changed the game completely.  Much more tax due from the average LL and a computer system which reaches far into an individual’s financial transactions.

They might have got away with it for years but that time is now coming to an end...

 

Yes, it is only since the new tax law created in 2015 and in force since April 2017  that the realisation of the duty on most landlords to maintain proper tax records has come about. Prior to that, HMRC had less reason to look, especially at small scale landlords with may be one or two properties. The new law impacts landlords who are higher/top rate taxpayers as the relief is reduced to the basic rate.

You do have to wonder how many landlords genuinely aren’t higher rate payerS. There will be a few, likely retired with one or two properties  in cheaper parts of the country who perhaps inherited the property. But I also expect there are a load who have failed to add their property income to their salary. Maybe they are basic rate payers in their jobs, but pretending you don’t also receive rent to stay at the basic rate isn’t in line with the law. This bunch will squeal the loudest when found out!!!

[spyguy]

5 minutes ago, Mikhail Liebenstein said:

Yes, it is only since the new tax law created in 2015 and in force since April 2017  that the realisation of the duty on most landlords to maintain proper tax records has come about. Prior to that, HMRC had less reason to look, especially at small scale landlords with may be one or two properties. The new law impacts landlords who are higher/top rate taxpayers as the relief is reduced to the basic rate.

You do have to wonder how many landlords genuinely aren’t higher rate payerS. There will be a few, likely retired with one or two properties  in cheaper parts of the country who perhaps inherited the property. But I also expect there are a load who have failed to add their property income to their salary. Maybe they are basic rate payers in their jobs, but pretending you don’t also receive rent to stay at the basic rate isn’t in line with the law. This bunch will squeal the loudest when found out!!!

S24 only fully came in force this year, just in time for Covid.

HMRC dont randomly go thru peoples tax. 

What they do is look for a group of people whove not been paying tax. Thats used as basis to chase similar people. Builders and dentists are very popular.

I think HMRC need ~3k of tax to justify a case. Then, when they find a lot of similar they keep hitting that group.

The only LL that has a chance of getting away with it is one who owns the building 100% outright and takes cash in hand, which they get rid of - think beds in sheds .

A IO BTL LL has not chance.

HMRC can see the mortgage being paid, the LLs income, and tenant paying by bank transfers, which will be most as  IO BTL are forced to use an managing agent by the IO BTL mortgage provider.

 

 

[Innkeeper]

Hopefully the government will be telling HMRC that it needs as much money as possible to pay for all the Covid support schemes.

Previous governments of all parties have at times decided to cut HMRC staff/resources, never making the basic connection that this move will lead to a fall in tax collections....

[highcontrast]

45 minutes ago, Innkeeper said:

They might have got away with it for years but that time is now coming to an end...

 

13 minutes ago, spyguy said:

But I also expect there are a load who have failed to add their property income to their salary. Maybe they are basic rate payers in their jobs, but pretending you don’t also receive rent to stay at the basic rate isn’t in line with the law. This bunch will squeal the loudest when found out!!!

P.s. Is it just me or are the VI bull trolls/BTL scum posters notable by their absence on this thread?

 

[Killer Bunny]

58 minutes ago, dtl said:

I know several people who have had to pay loan charges. One person I know had to re-mortgage his family home to pay a £300K bill.

There have also been several documented cases of loan charge related suicides so onerous has the bill and associated fines been.

 

What is “Loan charges” someone please?

[Killer Bunny]

57 minutes ago, Innkeeper said:

Thanks for your posts on this subject. 

@dtl

+1

[Locke]

26 minutes ago, Killer Bunny said:

What is “Loan charges” someone please?

I believe it was a scheme where instead of being paid, the employer would lend you your salary and not expect repayment of the loan

[dtl]

26 minutes ago, Killer Bunny said:

What is “Loan charges” someone please?

In short it was a change in the law that spelt out the end of disguised remuneration tax avoidance, mostly used by high earners using Employment Benefit Trusts.

Remember the Jimmy Carr thing, at the time he voluntary left the scheme due to public opinion, ie no tax avoidance committed.

Prior to 2016 it seemed that these schemes were legal, it little bit out of the ordinary and a bit risky, but highly skilled tax QC's basically said you were OK using them.

In 2016 the wheels started to come off and by 2018 the wheels had fully fallen off, HMRC and the government changed the law.

What was a bit harsh was that the law changed not only going forward, bit the law also changed retrospectively making it law that the schemes had never been legal, for at least 10 years prior.

It gives a taste of what the HMRC can and will do.