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HMRC turns screw on landlords letting online
26 January 2016
HM Revenue & Customs (HMRC) intends to activate a power that has laid dormant on the statute books since 2013 to force electronic payment processers to hand over details of their customers.
Electronic payment processors are online web portals that advertise property to rent and take payments from customers for landlords.
The targets are online letting agents and holiday letting sites such as AirBnB which advertise properties to let and collect deposits and booking fees for landlords.
HMRC believes the measure will plug a £250 million hole in the £15 billion tax gap by tackling part of the black economy.
The association of Certified Chartered Accountants (ACCA) is warning property owners to include all property income on tax returns.
“HMRC will be turning the screw on online traders in 2016 – including those they rent out property,” said ACCA’s head of taxation Chas Roy-Chowdhury.
“Money made by letting a property at home or abroad will be classed as income and must be declared to the taxman. If you are using the web site to source customers, then I would strongly advise to make the necessary declaration to HMRC.”
Full details about the new measure were explained by HMRC in the report ‘Tackling the Hidden Economy’.
“Data is a powerful tool for checking tax returns when the information comes from third parties involved in collecting or making payments on behalf of someone buying or selling through a web site,” said an HMRC spokesman.
“The information comes in bulk and is easily checked against the information traders give us about their earnings.”
High street letting agents already make similar annual returns to HMRC.
“HMRC are under tremendous pressure from the government to increase the tax revenues collected,” said Roy-Chowdhury. “If they believe that you are deliberately withholding information about a source of income they will look to penalise you.”