Aug

Send in tax returns even if you don’t make a profit

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Unfortunately, we still speak with amateur landlords who may have owned a rental property for years, often by accident, who have not submitted any tax returns. This is most commonly because they think they don’t need to if they haven’t made a profit.

To be fair to HMRC if no profit hasn’t been made and you own up first they are pretty understanding about it.

However, Newham council are now working with HMRC investigating all landlords that are on their selective licencing list, but not declaring on self assessment tax returns that they own rental property. They think this could involve up to 13,000 landlords, which is about half the total number in the borough.

Sir Robin Wales, Newham Mayor, said: “In addition to uncovering large scale exploitation of vulnerable tenants, our licensing scheme has also unearthed that many unscrupulous landlords may be benefiting from undeclared tax.

“At a time when local authorities are experiencing savage cuts, and Newham alone has had half its grant funding cut, possible tax evasion on this scale takes money from vital public services. This is money out of the pockets of our poorest residents who rely on our services the most.

“While the Chancellor is scrambling around ahead of his Autumn Budget and the Prime Minister is claiming there is ‘no Magic Money Tree’, Newham has the solution in private rented licensing.“

University of London professor, Richard Murphy, claims that tax revenue losses from the PRS could amount to £1 billion per annum.

Murphy’s assessment is based upon the above Newham statistics and he said in his blog, “Their estimate is that maybe £200 million of tax is not being paid in London alone as a result of the failure of landlords to register to declare tax that they owe. This compares with HMRC’s suggestion that they may lose £550 million of tax a year in this way across the country as a whole.”

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