Send in tax returns even if you don’t make a profit – Newham and HMRC crack down

by Property 118

10:13 AM, 15th August 2017
About A year ago

Send in tax returns even if you don’t make a profit – Newham and HMRC crack down

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Send in tax returns even if you don’t make a profit – Newham and HMRC crack down

Unfortunately, we still speak with amateur landlords who may have owned a rental property for years, often by accident, who have not submitted any tax returns. This is most commonly, because they think they don’t need to if they haven’t made a profit.

To be fair to HMRC if no profit hasn’t been made and you own up first they are pretty understanding about it.

However, Newham council are now working with HMRC investigating all landlords that are on their selective licencing list, but not declaring on self assessment tax returns that they own rental property. They think this could involve up to 13,000 landlords, which is about half the total number in the borough.

Sir Robin Wales, Newham Mayor, said: “In addition to uncovering large scale exploitation of vulnerable tenants, our licensing scheme has also unearthed that many unscrupulous landlords may be benefiting from undeclared tax.

“At a time when local authorities are experiencing savage cuts, and Newham alone has had half its grant funding cut, possible tax evasion on this scale takes money from vital public services. This is money out of the pockets of our poorest residents who rely on our services the most.

“While the Chancellor is scrambling around ahead of his Autumn Budget and the Prime Minister is claiming there is ‘no Magic Money Tree’, Newham has the solution in private rented licensing.“

University of London professor, Richard Murphy, claims that tax revenue losses from the PRS could amount to £1 billion per annum.

Murphy’s assessment is based upon the above Newham statistics and he said in his blog, “Their estimate is that maybe £200 million of tax is not being paid in London alone as a result of the failure of landlords to register to declare tax that they owe. This compares with HMRC’s suggestion that they may lose £550 million of tax a year in this way across the country as a whole.”

 



Comments

David Price

9:42 AM, 16th August 2017
About A year ago

Landlords would pay a great deal more tax if the government made it easier to evict tenants for non payment of rent.

Richard U

11:09 AM, 16th August 2017
About A year ago

Perhaps if everyone submitted a tax return that made a loss, it would be clearer to the government the impacts of section 24?

Ian Narbeth

15:11 PM, 16th August 2017
About A year ago

I wonder how many of the "unscrupulous landlords ... benefiting from undeclared tax" are Council or PRS tenants illegally subletting their houses or flats. How many people took in above the threshold for Rent a Room but failed to declare it as they were paid in cash?
Interesting that the rent a room threshold has been raised from £4250 in 2015/16 to £7500 for 2016/17, a 76% increase. Having squeezed professional landlords I suppose the Chancellor has money to give away to amateurs.

Tobias Nightingale

10:16 AM, 17th August 2017
About A year ago

Reply to the comment left by Ian Narbeth at 16/08/2017 - 15:11
To be fair the rent a room scheme amount of £4250 was left frozen since 1997 until the increase. Funny though that the Grenville tower 'victims' have been given a waiver for prosercution for illegal subletting!!

Asad Rehman

6:01 AM, 22nd August 2017
About A year ago

Newham has recently made an application to central government to renew its license for a further five years. To help it's case it has decided to provide HMRC with details of all landlords with a view that it can now approach central government with the claim that licensing has allowed extra tax revenue in the hope that will help its case to achieve a further five years of licensing in the borough because when it comes to all other property related measures the licensing scheme has been of little success.


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