Do Your Clients Have Undisclosed Income From Property?

It could be important to know because HMRC launched a campaign on 18 February targeting taxpayers who receive income from property, but have not been disclosing it on their self-assessment return.

HMRC have advised the Chartered Institute of Taxation (CIOT) that this will be the first of a series of new type ‘interventions’ designed to avoid the more traditional and lengthy compliance reviews.

As long as the agent details are registered with HMRC then a letter will be sent to the agent as well as the taxpayer.

Based on the example letter we have seen, the letters are triggered by information or evidence that HMRC have obtained indicating that the taxpayer is receiving rental income.

The example letter points out that there is no legal obligation to respond, however according to information provided to the CIOT “further compliance action” may be triggered by failing to respond. Therefore if you receive such a letter we would suggest that it is treated seriously.

On the plus side, if there is undisclosed income and the letter is used as an opportunity to put things right, then penalties due may be reduced.

Of course, if no taxable income has been received then it will simply be a case of notifying HMRC by responding to the letter.

Some further information can be found on the CIOT website http://www.tax.org.uk/showarticle.pl?id=6552