July 6 2019 @ 11:22 by Richard Dawson
New research by accounting firm UHY Hacker Young claims that the number of UK buy-to-let landlords admitting to not paying tax on their rental income has risen by 145 per cent over the past 12 months.
It is thought that mounting pressure on buy-to-let landlords to declare their rental income from HMRC’s Let Property Campaign has driven this sharp increase.
The Let Property Campaign aggressively mailshots buy-to-let landlords that are suspected of avoiding paying tax on their rental income warning them of the consequences of tax evasion.
This has led to 16,110 individuals admitting to not paying tax in 2018/19 up from just 6600 in 2017/18.
The total amount of additional tax collected by HMRC from landlords admitting to unpaid tax has doubled over the same period to £42 million from £21 million.
Mark Giddens, partner at UHY Hacker Young, said: “HMRC sees the buy-to-let market as a source of hundreds of millions of pounds of unpaid tax. The amounts collected just from landlords coming in from the cold suggests they may not be too far wrong with that estimate.
“Buy-to-let landlords have been prosecuted and jailed both for under declaring rental income and for failing to pay CGT on the sale of buy-to-let properties.
“Considering the risks of big fines and criminal prosecution landlords are doing the right thing by coming forward to HMRC and declaring unpaid taxes.
“Whilst establishing and prosecuting a tax fraud involves a lot of hard work by HMRC they’ve made it clear that this is a route they will go down. The paper trail that exists with most property lettings makes it relatively simple for HMRC to show when tax is not being paid.”
Birmingham showed the highest increase in the number of those coming forward about rental income tax avoidance, with Leicester ranked second and Nottingham third.
No North East cities made the top ten list, which indicates either that North East landlords are paying their fair share of tax on rental income or are not feeling the pressure of the Let Property Campaign.