As the HM Revenue and Customs (HMRC) initiative will target back taxes on any undeclared rents, the accountancy firm has advised landlords against turning a blind eye to 'intervention' letters, even if they have not made profits on their letting.
The action forms part of a new series of government interventions designed to avoid lengthy, traditional tax investigations, with the first batch of letters due to arrive on peoples’ doorsteps shortly.
PKF tax investigations partner, John Cassidy said: “We have already seen HMRC use its powers to require banks to provide information regarding specific or unnamed/unknown taxpayers holding offshore bank accounts. Now the Revenue is becoming more active in using Government data from Stamp Duty Land Tax returns and other sources to pinpoint individuals who may be letting properties but do not declare rental income on their Self Assessment tax returns.
"While HMRC cannot be certain these individuals have made profits and there is no legal requirement to respond to such letters, ignoring such a letter may be counter productive.
"Once HMRC has identified a tax risk it is unlikely to let go until the issue is cleared up.
“Those who did not receive a letter this week and believe they may have escaped the Revenue’s grasp should note that this is only a pilot exercise for ongoing interventions that will start later this year. “
