If you’ve been keeping up with current affairs of a financial nature, you may have seen headlines towards the end of last year and more recently saying something like ‘Taxman Targets Tax Evasion’. For many, this won’t be relevant, but the latest clampdown stands to affect buy to let landlords who may not have been entirely honest with HMRC.
There are 3 different taxman targets for tax evasion that have been announced of late and it’s all part of a Government drive to increase their funds by £7billion extra every year by the 2014/15 tax year. Other sections of business that are being targeted include taxi drivers and street market traders; each of these is regarded as ‘high risk’ for non-declaration of monies earned.
Are you one of the taxman’s targets for tax evasion?
With buy to let landlords being seen as one of these high risk areas for tax evasion, we are strongly encouraging anyone in this position to look at their circumstances and come forward for help if you think you may owe the taxman money.
HMRC will be looking back as far as 2001/02 and have already flagged up 80,000 buy to let landlords who they believe to have claimed incorrect rental incomes or tax relief. Penalties can be severe, potentially costing landlord tax evaders not just the unpaid tax amount, but also interest on this sum. With the power to backdate for up to 6 years, this can add up to a substantial amount of money.
The way that the taxman targets tax evasion has become more aggressive recently, so if you know you’ve not been acting in accordance with their strict rules, it’s definitely best to hold your hands up to your mistakes now rather than face their wrath. If you voluntarily disclose this information, you’ll stand a much better chance of being treated more leniently and less chance of prosecution.
Tax rules for buy to let landlords
As a buy to let landlord, it’s worth remembering that you can only claim relief on allowable expenses, such as insurance, legal and accountancy fees, property repairs, loan interests and letting or estate agents fees.
If you’re in any doubt about whether or not you’re a potential target for the taxman’s latest crackdown on evasion, or you’re not sure what you can legally claim relief on, please feel free to contact our accountants here at Blue Skies and we’ll help you to get things in order.