Vision for an independent organisation to represent UK landlords20:18 PM, 16th September 2018
About A week ago 70
The taxman has finally come a cropper in the game of brinkmanship played on claiming unpaid tax right on the legal deadlines for chasing money.
HM Revenue and Customs is well known for chasing late payers and launching tax inquiries at the eleventh hour.
Many landlords are under investigation at the moment for inquiries relating to tax returns from 2004 – and today 1.9 million Pay As You Earn cases from 2006 were written off because the taxman either cannot trace the taxpayer or does not have enough time and manpower to manage the inquiries.
The cases relate to glitches in the HMRC computer system that issued the wrong tax codes to workers, leading to many underpaying tax.
How much tax is involved in these 1.9 million cases is unclear, but earlier in the year, the Treasury hinted the average amount of unpaid tax per worker was about £114.
That adds up to about £220 million for 2006.
Tax code errors are thought to affect 17.8 million workers and involve £3 billion of over or under paid tax between 2004 and 2008.
Income tax and capital gains tax paid on property transactions is not affected by the announcement.
However, property investors who have failed to make tax returns relating to rental profits or capital gains on property disposals in the last five years should expect a letter through the door before April 5, as HMRC likes to launch inquiries as the deadline approaches.
“I have spoken to one client this week still dealing with £1,600 of unpaid tax on rents from 2004 – plus interest accruing daily on the amount for the past six years and a demand for the same amount again in penalties,” said Steve Sims, of Yardleystar Property, The Money Centre’s preferred tax and accounting partner.
“If you have unpaid tax, it’s better to sort the matter out sooner rather than later – the interest and penalties are likely to be a lot less. In some cases, we have negotiated them away all together.”
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