HMRC’s Let property campaign, overseas bank accounts and low effective tax rates
HMRC are stepping up their campaign trail to ensure taxpayers pay the ‘correct amount of tax’...
The targets of these campaigns and initiatives are landlords and taxpayers with overseas bank accounts or low effective tax rates... HMRC are taking a blanket approach in all cases and ignoring the fact that many taxpayers may well be on these target lists but will no doubt be disclosing their tax affairs as required.
In recent weeks we have seen examples of landlords receiving ‘let property campaign’ letters inviting them to disclose tax on previously undeclared profits. It would appear that HMRC are using information provided by letting agents and mortgage lenders to take a focused approach with these letters. It is important you assess whether any tax has in fact been underpaid and notify HMRC accordingly before making any necessary disclosure to them under the terms of the campaign.
Taxpayers with non-UK bank accounts have been written to and asked to certify that they have fully declared all income in their tax returns or to make an appropriate disclosure. Frustratingly, these are being sent to all taxpayers including remittance basis users who are only required to declare non-UK income should it be remitted to the UK.
Finally, letters have been issued noting clients have a lower than average effective rate of income tax. These have been sent without reference to the content of the Tax Return in question and the wholly legitimate reliefs claimed which may have contributed to the reducing the effective rate of tax. The Government backed Enterprise Investment Scheme (‘EIS) and Seed Enterprise Investment Scheme (‘SEIS’) have become increasingly popular in recent years and will be “responsible” for reducing a taxpayers effective rate of tax.
If you have received any kind of communication from HMRC it is important these are responded promptly as a failure to do so could prompt further investigation from HMRC. If you require assistance with these please do not hesitate to contact us.