I might be late to the HMRC party!

by Readers Question

6 months ago

I might be late to the HMRC party!

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I might be late to the HMRC party!

I might be late to the party with this one. Yesterday I received from HMRC a letter/notice under Paragraph 1, Schedule 23 to the Finance Act 2011 from HMRC requiring me (as a letting agent) – a ‘relevant data holder’- to provide ‘relevant data’ about the landlords I manage for and the payments that have been made to them.

What this means is that I have to complete a spreadsheet detailing the full names of all of my landlords and their home addresses, their rental property addresses and the total gross amount received for each. At the moment this is being restricted to the 2016/17 tax year.

I have well over 300 properties on my books, making this a mammoth task, and the data they are requesting needs to be transcribed on to HMRC’s specific spreadsheet in the specific format they insist by 09th April this year.

I discovered some background to these notices on an accountant’s blog, but in brief, there are 900,000 landlords not paying tax on their rented properties, a ‘be-honest-and-come-and-talk-to-us’ campaign by HMRC proved fruitless, so now they’re making me jump through hoops!

Who pays for the ridiculous amount of time this will take? And whilst I may be required to provide the information, am I forced to provide it in their format (my software can run reports with various parameters but ultimately it has to be manually transposed). Some of my questions are answered in HMRC’s handy FAQ guide, but I’m trying to distinguish between legislative obligations and their wish list.

I’d be keen to hear readers thoughts on this action.




6 months ago

Heard of this. Suggest you do not split hairs with HMRC, as I assume this bill will have a fine or penalty for non compliance. "You have been found out " letters have been going out on a regional basis but the figure is astonishing -I wonder if it is accurate or is it a shake the tree and see what falls out.

Monty Bodkin

6 months ago

HMRC have been requesting this for many years, I'm more surprised this comes as a shock to you as a letting agent with over 300 properties. What else don't you know?

"Who pays for the ridiculous amount of time this will take?"

Ultimately, tenants with higher rents.

Letting agents and landlords ignorant or ignoring the full costs of legally letting property are able to undercut legally compliant landlords.

Monty Bodkin

6 months ago

Section 24 is abhorrent to any right thinking capitalist but it does have an upside for professional landlords.

The estimated 900000 landlords not declaring have hitherto been of little interest to HMRC. It is ridiculously easy to identify rental property but if there is no tax to be collected, why bother? Most(?) of those 900000 have been making a loss, no point in HMRC telling them to declare and carry forward their losses.

Section 24 changes all that.

Amateur landlords, only interested in capital appreciation, claiming they are good landlords because they "charge rents below market rates" won't be so keen once they get taxed on turnover.

Yvette Newbury

6 months ago

HMRC have been writing to letting agents for decades requesting this information, way before the Finance Act 2011. I recall our agent dealing with our rental property around 1988-89 had the same letter and they called all their clients to warn them they were supplying HMRC with landlord details.

We have been filing these reports to HMRC for over 15 years........I would be very anxious if you are a letting agent and have not...... HMRC might reasonably ask you to provide historical data; we have recently had a client who has been asked to provide rental income data for the last 11 years. There is no "get out of jail" card with this one; failure to send them the accurate and complete data will only make them show more interest in your business.......


6 months ago

"I have well over 300 properties on my books, making this a mammoth task"

You mention that they need 4 bits of information per property and you have 300 properties. Assuming you have all of this information on an electronic record, I would think that it would take 3 minutes tops per property - it shouldn't take much more that this even if it had to be typed in manually. That would take 15 hours

Although I would have thought most agents can already extract all of their data into excel so the job would not take more than 30 minutes.

Either way, I do not see this as mammoth, particularly with 900,000 landlords not paying tax.

Graham Bowcock

6 months ago

Hi Luke

I too am surprised you’ve not been asked before. My agency has been doing it for years. Our accounts staff know what to do to make sure that we comply. The hard part is year one as HMRC do want data in their format.

I think you need to get on with it.

As for the time, it’s part of the fees we charge out landlords. Some agents make a specific charge to cover it, but this may not be commercially acceptable.

A final note is that our accountant advises against discussing this with our clients. It may be construed as “tipping off “ under money laundering regulations. If your clients have been economic with their tax returns it’s not up to you to tell them (unless you did the return in the first place!); HMRC will let them know.




6 months ago

Reply to the comment left by Monty Bodkin at 22/02/2018 - 10:51Does not matter if these landlords have been making a loss.
Since 2010 non submission of a tax year return equates to a £1300 fine. Soooo .... 900 000 x £1300 x 8 = 😊to HMRC

Monty Bodkin

6 months ago

Reply to the comment left by Asif Ahmed at 22/02/2018 - 15:44
Unfortunately I don't think you are right.
I don't think it comes under late filing.
I think it comes under 'failure to notify' which has a maximum penalty of 30% of the potential lost revenue (for a UK resident, not deliberate).

Soooo....900 000 x 30% of a loss = £0 to HMRC

Happy to be proved wrong!


6 months ago

Reply to the comment left by Monty Bodkin at 22/02/2018 - 21:16
I hope you are right too however a quick search shows "if you need to submit a tax return and you are late ...." (HMRC) As you know even with zero tax to pay ...you need to submit a tax return.

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