Tax warning for buy-to-let investors

November 19, 2008 on 7:42 pm | In News |

THE more canny buy-to-let investors in the market at the moment are those acknowledging non-disclosure of rental income or capital gains arising from the previous sale of investment properties.

Tony McDonough, Liverpool Daily Post - 19 Nov 08

HM Revenue & Customs are contacting up to 1m buy-to-let landlords who it suspects may not be paying the correct amount of tax on their investments.

Under the new initiative, tax inspectors will review details obtained from various sources, including letting agents and the Land Registry Office, in order to uncover landlords who have not fully disclosed rental income or capital gains arising on the sale of investment properties. From April, tax inspectors will have new powers that will give them the right to inspect business records at the place of business.

These same powers will apply to landlords.

As most buy-to-let businesses are run from home, this will allow the inspector access to the landlord’s personal residence, although the inspection will be restricted to the parts of the home used in the business. HM Revenue would normally give at least seven days notice prior to the visit, but, in exceptional cases, no notice would be given.

Thus, we would strongly recommend that all landlords maintain separate business and private records and bank accounts to avoid inspectors gaining access to personal records which they have no right to see.

Despite the recent downturn, there are now more than a million buy-to-let mortgages in the UK, compared with only 120,000 back in 2000. Full Article