HMRC Revives Let Property Campaign for Landlords

HMRC is trying to revive a campaign to collect more unpaid tax from landlords after a decade of questionable results.

The Let Property Campaign was set up in 2013 to encourage errant landlords who had misdeclared the income tax they owed by mistake or on purpose.

The government set a heady target for HMRC to plug the lost tax gap, estimating 1.5 million landlords a year underpaid income tax by £500 million.

Fast forward to April 2024, a decade later, and the campaign had dealt with 87,277 voluntary disclosures, which raised around £250 million in tax, interest and penalties. This disappointing result suggested only 5 per cent of target landlords had decided to come clean about their property profits by making a voluntary disclosure of tax underpayment.

Fast forward a year, and HMRC has pumped more cash into the campaign and raised a record annual haul of £107 million in unpaid tax from 7,800 investigations. The figures reveal a declining number of cases - down about 3,200 cases from 11,000 in 2023-24, but reclaimed tax up from £42 million to £65 million.

Nudge letters

HMRC says: "The Let Property Campaign offers landlords a straightforward way to disclose any unpaid tax by securing the best possible terms - but failing to act before an investigation begins can lead to harsher tax penalties."

Landlords are tipped off that they are about to become the subject of a tax investigation when they receive a nudge letter.

The letter explains that the landlord should check their tax filings for errors.

In reality, HMRC is telling the letter's recipient that their tax filings are incorrect and they have a chance to put them right with a reduced penalty if they admit their mistakes. Landlords with nudge letters should not ignore them and ought to take professional advice immediately.

HMRC's wide-ranging powers to access data from banks, councils, the Land Registry, mortgage lenders and letting agents allow tax inspectors to build taxpayer profiles which pinpoint possible missing financial information.

Making a Let Property Campaign disclosure

The Let Property Campaign aims to uncover landlords living in the UK who owe tax on income generated from letting homes in the UK or overseas.

Contacting HMRC to declare unpaid tax gives landlords a 90-day window to work out what they owe and to pay any overdue tax and interest. In return for the admission, HMRC promises lower penalties.

HMRC has an online Let Property Campaign checker that screens landlords who are unsure if they should consider a disclosure.

However, tax advisers would advise landlords to speak to a professional before contacting HMRC.

Landlords making a disclosure can submit the information to HMRC by completing an online form.

MORE INFORMATION: Read the HMRC Let Property Campaign guide for landlords