Rental Tax Evasion

muon

muon

muon

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https://www.theguardian.com/busines...-london-borough-fail-to-declare-rental-income

I don't get what's wrong with having regulation over rental properties (firstly identifying them) and then protecting tenants.

The highest fee touted in the article is £400 for a 5 year licence which seems reasonable to me. Yes these costs will be passed on to tenants (unless it is self funding, see below). With Council Tax already monitoring residential properties, it doesn't seem like a major addition.

Secondary effect seems to be you identify all the tax evaders! £200m a year in a single London borough! May as well employ an entire HMRC department if this can be scaled across London alone, never mind other cities where it is likely happening. I don't think anyone would be surprised to hear that evasion runs into the double digits. So many single property landlords who probably just risk it (so many more likely lie on returns).
 
In northern ireland, all landlords are part of a registration scheme, this is in addition to the deposit systems, and in addition to being hmrc registered.

Can't hurt to make people register, and then slaughter anyone who evades.

In northern ireland the landlord still pays rates, as we have no council,tax system, this is probably better for the local economy, as so many would be exempt from payments here.

I think it was either 70 or 90 pounds for a three year registration. Maybe 90.
 
The government is blocking similar schemes elsewhere though.
Newham is battling with the Department for Communities and Local Government to have its licensing scheme renewed, following a 2015 clampdown by the government, which said licensing imposes “unnecessary additional costs” on landlords. Neighbouring borough Redbridge has already had its application for landlord licensing rejected.
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I don't agree with posts above about rent regulation though. Just create the right environment and make it easy to move (which removing tenancy fees, as planned, will do).
 
This is a classic case of tax that's too expensive to collect. The sector is so fragmented, with literally thousands of landlords collecting comparatively trivial sums, with the added complication of costs, vacancy, shared lets etc added to the equations.

It's a similar problems with things like Airbnb, eBay sellers all under/not declaring.

HMRC have bigger fish to fry.
 
The Article categorises it as Tax Avoidance?
Not posting rental income in made from tenants in Newham isn't really some complex Ltd company Cayman island offshore kind of deal, it is evasion to fail to declare income from renting property in London and should be prosecuted as such.
Unless we are all for the few and not the many...
 
Jokester said:
Hopefully they get the book thrown at them.
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HMRC regularly do amnesties, I think there is a campaign on going currently so unless it's someone not disclosing £££ms I doubt HRMC will pursue anyone further if they declared now.
 
stewski said:
The Article categorises it as Tax Avoidance?
Not posting rental income in made from tenants in Newham isn't really some complex Ltd company Cayman island offshore kind of deal, it is evasion to fail to declare income from renting property in London and should be prosecuted as such.
Unless we are all for the few and not the many...
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Reading it I think they say avoiding tax in a general sense. Not in a legal sense.
 
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Stretch said:
This is a classic case of tax that's too expensive to collect. The sector is so fragmented, with literally thousands of landlords collecting comparatively trivial sums, with the added complication of costs, vacancy, shared lets etc added to the equations.

It's a similar problems with things like Airbnb, eBay sellers all under/not declaring.

HMRC have bigger fish to fry.
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The councils are offering to do most of the work for them though. Most tax reconcilliation is already automated anyway. It shouldn't be hard as a first step to cross check to see who hasn't filed a return.

The amounts are so much you can employ people to chase these. The private sector finds it profitable to chase far smaller debts.

The other benefit is that if you increase the likelihood of getting caught, say from 1% to 10% then more people will voluntarily abide.

Even just forcing a registration scheme might make people think twice about evading. These people arent hardcore criminals, they do it because they (currently correctly) think they cant be caught.
 
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I know a number of dodgy landlords that don't declare, and as one poster said the issue is that its relatively small amounts over a large amount of people....

When I became a landlord for the first time and had my mortgage changed to allow me to let it, my lender actually got in contact with HMRC before I had the chance and they started to send letters my way reminding me to set up a SA account before in the relevant timelines. Even if I wanted to avoid it (and I didn't) I would not be able to.

In the case of my other properties I let further on down the line, it was my agent that did all of the work for me and informed HMRC.

This makes me think that with a number of these properties the lenders have no idea that it is being let out.
 
muon said:
The councils are offering to do most of the work for them though. Most tax reconcilliation is already automated anyway. It shouldn't be hard as a first step to cross check to see who hasn't filed a return.

The amounts are so much you can employ people to chase these. The private sector finds it profitable to chase far smaller debts.
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The problem isn't so much chasing the money, as calculating how much they owe. This can only really be done by a qualified tax official. Once they know how much you owe, getting the money is the easy bit. You either pay or they fine the living daylights out of you. If you still don't pay, bailiffs arrive.

It's also worth remembering the headline figure of £200m is probably a very crude best case scenario. Ignoring the fact that many landlords make next to no income out of their lets, and only hold the property as an appreciating asset.

The vast majority of bigger landlords who make the cash will declare.
 
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Hmm
A Hampshire landlord who evaded £158,000 of capital gains tax from the sale of properties has been jailed for two years and three months.
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Wow, must be worrying if you're an amateur landlord.
 
What goes round, comes round.

Would the evader have to still pay the tax or is the 2 year jail sentence it's equivalent?
 
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