As specialist landlord and property tax advisors, RITA4Rent have been frequently asked how the penalties are affected, if you need to report your past undeclared rental income and expenditure under the Let Property Campaign, after receiving the prompted letter from HMRC.
As shown in one of our previous blogs, these letters referred to by our clients as either AI or A1 letters, state that HMRC has information you have been receiving rental income, and that “your disclosure will be classed as prompted.” HMRC go on to state that “this may affect the penalty which you will have to pay.” This has caused confusion, and our blog today aims to clear up any doubt.
Depending on your circumstances, if you have rental income to declare to HMRC, and you have received the AI (A1) prompted Let Property Campaign letter, you will fall into one of three categories. We detail these below, and highlight the penalties you would face:
1.) If you have received rental income which has not been declared in the past, but you were not deliberately trying to conceal your property from HMRC, the penalty will be 20%. HMRC allow this to be reduced to 10% if you advise them within a year of when the tax initially became due.”
2.) If you received undeclared rental income, and deliberately failed to tell HMRC, or, you sent a self assessment tax return, deliberately withholding rental income, then the penalty will be 35%.
3.) If you sent in a self assessment tax return, but carelessly did not include your rental income, then the penalty will be 15%.
If you require any assistance in bringing your records up to date, please do not hesitate to contact us by email, or talk to us in confidence on 0800 1 22 33 57.
We have dealt with countless HMRC Let Property Campaign cases, and as specialists in landlord tax advice, we will be delighted to guide you through the whole process.
For further information and reading, please view our blog post here.