Owners of buy-to-let properties are being advised to seek professional advice on their tax affairs by Surrey accountants TWP Accounting LLP.
The warning comes after it was widely reported in the media last month that HM Revenue & Customs (HMRC) had written to hundreds of landlords and their accountants seeking clarification of rental income declared in self assessment tax returns.
The letter says that HMRC requires the details to calculate any tax due and warns that interest may be charged on late payments of tax, with penalties for income not previously declared.
It was subsequently reported that HMRC had denied it was launching any kind of crackdown on landlords but had said that the letters were simply designed to help self assessment taxpayers with their tax affairs.
Andrew Goddon, a partner in TWP’s tax division, said: “It is difficult to say whether this is the start of increased interest in landlords’ tax affairs by HMRC, but anyone who earns income from buy-to-let or other rental property would be wise to seek professional advice to ensure that their tax affairs are in order.
“Tax enquiries can go back six years, with heavy fines and penalties for late or unpaid tax, so failure to pay the correct sums can prove very expensive.”
Buy-to-lets represent a significant sector in the UK property market. At the end of 2007, the Council of Mortgage Lenders reported there were more than one million buy-to-let mortgages in circulation and buy-to-let lending totalled £24.1 billion in the second half of last year.
For more information please call 01932 704 700.