The Let Property Campaign

The Let Property Campaign (LPC), an HMRC disclosure programme, was created to assist landlords in resolving any prior UK tax problems related to their rental income. The LPC enables landlords to fully disclose any unpaid taxes under settlement conditions that are frequently better to those that would apply if the irregularities were found as part of an HMRC investigation. This is due to the fact that HMRC frequently imposes only the lowest possible financial penalty where an LPC disclosure is accurate and comprehensive.

Who may utilise the LPC?

Landlords of residential property in a wide range of situations are permitted to provide information under the LPC, including:

-]landlords renting out one or more homes in the UK

-]landlords who reside outside the UK yet rent out property within UK

-]British landlords who rent out property abroad

-]landlords that rent out a space in their primary residence

-]Specialized landlords that rent out homes to students

-]Holiday home rental landlords

How far back in time must landlords disclose?

The number of taxable years will vary depending on a number of variables. It will always be required to take into account the actions that resulted in the irregularities in your tax affairs and whether you were registered for Self-Assessment in the relevant tax year, even though Cheylesmore’s team of specialists will be able to offer customised advice that is unique to your case.

The time restrictions outlined in law restrict HMRC’s ability to raise assessments. Your disclosure must include all tax liabilities that HMRC still owes in order for them to be collected (as set by statute). This may take up to 20 years or only four tax years. HMRC may launch an investigation and try to collect more tax and impose harsher penalties if an LPC disclosure doesn’t include all the assessable tax liabilities.

Can HMRC get information on rental income?

Several different sources provide information to HMRC on rental properties. These range from banks to anonymous tips from members of the public to letting agents, government organisations, local councils, and government agencies. HMRC uses this information to determine if you have an overdue tax burden . Then, HMRC might write to you and invite you to submit a disclosure under the LPC, stating that it has cause to believe that your rental income may have been underreported.

What action should you take in response to an HMRC nudge letter?

Never disregard the letter. Even while HMRC’s suspicions occasionally turn out to be baseless, it never sends out these “nudge letters” unless it has valid reason to believe that your UK tax affairs are irregular. We strongly encourage you to speak with a qualified tax expert to assist you in examining your situation even if you are certain that you have complied with all of your tax requirements.

The rental income review service we offer at Cheylesmore Chartered Accountant is extensive. This reduces the chance of exposure to unauthorised tax and fines and allows us to advise our clients on the best response to HMRC’s “nudge letter”

Taking charge

We strongly urge that you quickly assess your position in its entirety if you have concerns about underreporting rental profits to HMRC. If a landlord makes a mistake, they can voluntarily register to disclose it under the LPC. You’ll pay a much smaller fine by coming forward and disclosing your information without being asked to do so than if HMRC had to write to you first.

Penalties and methods for lowering them

Every time anomalies are found, HMRC is required to think about imposing financial penalties. HMRC will take into account the underlying behaviour, whether you come forward freely, and the calibre of your eventual disclosure when deciding whether to impose penalties. A percentage of the initial tax understatement is used to calculate the penalty.

Cheylesmore Chartered Accountants has a long history of success in ensuring that our clients pay the least amount of money that is permitted by law. This results in many clients not paying any penalties at all.

What is the procedure for LPC disclosure?

The LPC disclosure process is as follows, regardless of whether HMRC issues you with a “nudge letter” or you decide to come forward voluntarily:

1. Registering informs HMRC of your desire to make a voluntary disclosure. HMRC will acknowledge receipt and provide a disclosure reference number within 15 days (DRN).

2. Disclosure - After HMRC confirms registration, the LPC disclosure must be submitted within 90 days. The following must be disclosed:

-]Rent received but not reported

-]Tax, interest, and penalty charges that may arise

3. Payment - Unless a time-to-pay arrangement has been arranged with HMRC, payment must be made at the time of submission.