Mayor of Newham claims half the landlords there evade tax

Mayor of Newham claims half the landlords there evade tax

10:49 AM, 11th September 2017, About 5 years ago 12

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Last month a couple of unsubstantiated statistics were published in the papers.  They both came from the Labour mayor of Newham, Sir Robin Wales, who has an axe to grind.  He is fighting the government over the continuance of the mandatory universal licensing scheme that was introduced in 2013 and will end in December.  He wants to extend it – at the cost to landlords of £400 a property, instead of the current £150.

Sir Robin joined the Labour Party when he was 15.  He was knighted in the 2000 Birthday Honours for services to local government.

In a letter to Philip Hammond, Sir Robin wrote: “It is our understanding that, to date, up to 13,000 Newham landlords are of interest to HMRC, where there are discrepancies between declared income and our records, with potentially significant financial implication for the exchequer.”

Newham Recorder Click Here

This begs the question – what is his figure based on?  The only organisation that could know how many landlords may have failed to declare rental profits is HMRC.  And HMRC rejected the figure.  “HMRC said it did not recognise the figure of 13,000 landlords put to it by the council.” according to the Newham Recorder, and the Independent.

Independent Click Here

So where did his “understanding” of up to 13,000 come from?  The local paper gives the exact number of landlords: 26,254.  Was it based on anything more than “I bet half of those landlords are not paying tax you know”?

Note that he wrote “up to 13,000”.  So that if even one landlord was not declaring all of his or her rental profit, then Sir Robin’s claim would be correct.

If he had an accurate figure he would have used it.  The fact that he did not casts doubt on the “up to 13,000”.

The story was also published by the Guardian.  In the latter, Patrick Collinson even claimed that the miscreants had been identified.  His article started with “Up to 13,000 landlords in just one London borough have been identified as failing to declare their rental income, prompting estimates that unpaid tax in the capital is costing the public purse nearly £200m.”

The Guardian Click Here

He did not acknowledge that HMRC did not recognise the figure.  He merely wrote that “HMRC would not confirm the figure”.  This could be taken to mean that the figure was right but that HMRC refused to admit it, rather than the figure being wrong and rejected by HMRC.

He continued “The council estimated that unpaid tax by landlords is costing the public purse nearly £200m in London – and far more nationally.”

How did he get from 13,000 landlords in Newham to nearly £200 million across London?  Again, the local paper comes to our aid.  It said “The letter also highlighted data carried out by Institute for Public Policy Research (IPPR) in 2014 which estimates that the amount of undeclared tax in London totals more than £183 million.”

The source of the £183 million is described in an article from March 2014 by InsideHousing, with the title “Rogue landlords in London avoiding £183m in tax”

It said “Following a pioneering mandatory register of private landlords, Newham Council has built up a database of 20,000 landlords in the borough.

Using these figures it estimates landlords are avoiding £183.1 million in tax across the capital. The data, verified by the Institute for Public Policy Research, suggests £508 million in rent is paid to landlords cash-in-hand in London.”

Inside Housing Click Here

You have to admire the accuracy of the made-up figure for undeclared rent to the last £8 million, and the accuracy of the tax on this rent to one decimal place.  It makes the figures seem genuine, rather than invented.  Unfortunately there is no indication of where the £508 million for rent paid in cash was plucked from.

But the tax at 36% of rents seems high.  If the assumed tax rate had been 40%, that would only have allowed £50 million of costs (10%), including mortgage interest.  If the tax rate was 45%, the allowable costs would have been only about £100 million (20%).

But the IPPR was presumably happy with it, showing comradely solidarity with the mayor.  It is a Labour Party think tank.

“Setting up IPPR was a conscious attempt by Labour leaders and Labour sympathisers to promote their party’s modernisation beyond what was discussed by party-internal policy-making bodies e.g. during the Policy Review process.”

Sourcewatch Click Here

The Institute for Public Policy Research has been criticised by the Charity Commission, which said it “had “exposed itself to the perception that it supported the development of Labour Party policy”.

Telegraph Click Herel

What does it matter if the figures of 13,000 and £200 million are wrong if it means that Newham can extend mandatory licensing – at more than double the price?


by terry sullivan

11:14 AM, 11th September 2017, About 5 years ago

robert wales should be returned to scotland--hes a vile nulab apparatchik

by Dr Rosalind Beck

11:34 AM, 11th September 2017, About 5 years ago

Thanks AL. Journalism on this subject is shoddy beyond belief. And when it is exposed as such, there are no apologies or corrections issued. This kind of journalism is closer to fiction than fact. It is excellent that you are exposing it as such.

by Dylan Morris

12:03 PM, 11th September 2017, About 5 years ago

Well done dissecting the propoganda here, it's very easy to read sensationalist claims such as this made by Newham Council and simply take them at face value.

The only way an accurate measure of how many landlords pay their correct amount of tax would be for HMRC to confirm to the Council exactly who is paying tax and who is not and the properties involved. But this does not appear to have happened as it would clearly be a Data Protection issue.

So the figure has been obtained by the Institue for Public Policy Research whoever they are. How exactly have this IPPR body obtained their information. What have they based it upon ? Of course we have no indication whatsoever. Have they simply stopped people in the street (how else would they do it ?) and asked them if they are a landlord and if so do they have properties in the Borough and are paying tax or evading it ? And how much tax exactly they are avoiding. I'm sure I know what my answer would be if approached.

So when you dig deeper it's pretty clear the tax evasion figure of £183 million has been completely made up. The whole thing is nothing but a ruse to continue and expand landlord licensing not only across Newham but all of England. It really is shocking what the landlord bashers are now getting up to.

by Mike D

13:08 PM, 11th September 2017, About 5 years ago

If they knew the answer, then HMRC and council would do something about it! Its clear they don't know, so like most of these articles, with poor research and knowledge, raging assumptions are made, then you have assumptions on assumptions multiplied......or in other words, a guess!
And this is professional Journalism & Politicians? we can all drag up 'opinions' to suit our own interest, but facts, integrity and a professional approach, is always lacking in these articles....people just playing politics with few facts!

by Dylan Morris

13:48 PM, 11th September 2017, About 5 years ago

Reply to the comment left by Mike D at 11/09/2017 - 13:08
Exactly. Never let the truth get in the way of a good story.

by Marlena Topple

14:13 PM, 11th September 2017, About 5 years ago

Reply to the comment left by Dylan Morris at 11/09/2017 - 12:03
Providing high level data about the number of landlords registered by Newham Council and the number of Newham landlords that are paying income tax would not fall foul of data protection legislation.

by Annie Landlord

18:35 PM, 11th September 2017, About 5 years ago

I don't imagine for one moment that Newham has precise figures for how many landlords there are in the borough and they can certainly have no idea of 20,000-0dd landlords' tax affairs. Utter twaddle and propaganda. We do,
however, need a watertight method of registering landlords, to ensure we know where they all are. Perhaps rather than individual authority licensing schemes, which as we know only serve to swell the local authorities' coffers, every landlord in the UK should have to register with the NLA or RLA or similar as part of a national membership process. Every landlord would then have access to legally approved forms, information on every aspect of renting a property and access to the free helpline. I feel that would significantly enhance the renting experience for all landlords and tenants, and stop these crazily expensive and pretty useless authority licensing schemes.

by Dylan Morris

18:46 PM, 11th September 2017, About 5 years ago

Reply to the comment left by Annie Landlord at 11/09/2017 - 18:35
I believe HMRC already has access to the three deposit protection schemes. So would certainly be aware of all landlords, assuming they have protected the deposit of course.

by Annie Landlord

18:52 PM, 15th September 2017, About 5 years ago

Reply to the comment left by Dylan Morris at 11/09/2017 - 18:46
Yes I think they do, and HMRC is also aware of landlords who receive direct rental payments from local authorities. But I expect that the significant minority of landlords, accidental or otherwise, who own just one property are not registering deposits or receiving direct payments. At least by obligating every landlord to join a national scheme we could ensure that every landlord had access to all the basic legislation, and, indeed, were known to HMRC. It would discourage people like Robin Wales from plucking figures out of thin air, and 'reporters', who seem to do no research on what they write, from publishing vague opinions as factual certainty

by Bill

11:36 AM, 16th September 2017, About 5 years ago

Newham Council are worse than the Nazi's. Ex resident in Newham. When Mr Wales came knocking on my door he got shown the way off my property.

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