HMRC preparing for tax bonanza after Renters Reform Bill

The launch of a new landlord database, proposed by the Renters Reform Bill, could provide HMRC with a gold mine of information with which to pursue landlords for unpaid tax.

The warning comes from accountancy and business advisory firm BDO which says that - as yet - the Bill does not make clear whether HMRC will get full access to all information submitted as part of the registration process. 

The similar Register of Overseas Entities, already in place, does give HMRC full and automatic access and BDO warns that it is reasonable to assume that the Revenue will make use of any publicly accessible landlord data for compliance activities. 

The advisory service says HMRC is keen to ensure landlords declare their rental profits and gains on sale so they pay the tax they owe. It encourages those who have made mistakes to voluntarily correct their position by using the Let Property Campaign, part of HMRC’s Digital Disclosure Service, or other disclosure processes.

Further property data will also become available after the Land Registry implements the new information requirements in the separate Levelling Up and Regeneration Bill, aimed at extending transparency of property ownership and transactions.

HMRC will combine any new data from the landlord database with that which it can already access such as the Land Registry’s records, the Register of Overseas Entities owning UK property and the data within HMRC’s own Connect database, which reportedly holds over 55 billion pieces of data.  

This wealth of data analysis should help HMRC identify cases for investigation with a view to charging tax, late payment interest and tax-geared penalties.

Dawn Register, head of tax dispute resolution at BDO, says: “HMRC already holds significant information on taxpayers’ financial affairs. The introduction of a new private rented sector database will leave few places to hide for landlords who don’t comply.

“Any landlords who don’t currently pay the right amount of tax would be well advised to bring their UK tax affairs up to date before the register is introduced.

“In addition to providing peace of mind, making an unprompted disclosure should lead to lower tax-geared penalties for errors, compared to rectifying mistakes after HMRC gets in contact. It will also help to mitigate late payment interest - which is currently at a 14-year high of 6.75 per cent per annum and due to rise to 7.0 per cent from May 31.” 

We're excited to announce that we're working on building a shiny new website for readers of Landlord Today! As part of this process, commenting on articles will be temporarily disabled. We look forward to sharing our new and improved Landlord Today website with you shortly!