Farmers who let out houses or holiday properties on their farms have been urged to ensure they are up to date with their tax payments.
The warning from accountancy firm Saffery Champness comes as HM Revenue & Customs (HMRC) launches its latest let property campaign.
The campaign will allow all landlords of let property to catch up where they have either avoided, inadvertently or deliberately not paid tax on rental profits. The tax agency is offering lower penalties to those who come forward under the let property campaign, rather than waiting to have HMRC start a compliance check or an investigation.
“This is the latest in a series of tightly targeted campaigns by HMRC to increase its tax take from specific sectors and, in line with previous campaigns, there are concessions for those who come forward and declare that they have unpaid or underpaid tax rather than wait to be found out,” said Susie Swift, of Saffery Champness’s Inverness office.
“Concessions include being able to advise HMRC how much tax you think you should pay, being able to agree to spread payments rather than paying in one lump sum, and also being able to make a disclosure at that time about any other unpaid tax, for example on untaxed earned income (profits), untaxed investment income (interest), and any capital gains.”
She warn-ed that those with undisclosed tax liabilities who did not come forward under the scheme, would face the “full weight of the penalty regime” which is a penalty of up to 100% of the unpaid taxes.
She said: “For those hoping their activities will pass unnoticed, HMRC is now much better resourced at identifying properties for rent and holiday properties by using the internet and other media, and particularly for special campaigns such as this.
“In certain instances a review of undisclosed income may determine that a rental loss has been made, in which case this can be used to reduce future rental profits, but not to reduce the taxpayer’s tax liability on other income,” added Ms Swift.
She said the new tax campaign did not cover undisclosed rental profits on non-residential property such as shops, offices and garages.
Hamish Lean – Page 14