Why the tax man may be knocking on your front door

Buy-to-let landlords and freelances are facing a clampdown.

Amateur landlords and taxpayers with small amounts of freelance earnings could find themselves hit with hefty penalties under powers in a new parliamentary bill.

Neasa MacErlean The Observer, Sunday March 30 2008

Under the proposals - included in last week’s Finance Bill - tax inspectors could have the right to appear unannounced at the homes of those who own buy-to-let property or who work from home to hand out fines worth up to 30 per cent of any tax due if they are late in declaring income. The changes are due to come into force from 1 April 2009.

At the moment, the tax authorities have extensive powers to obtain information and levy penalties, but they also have a lot of discretion to waive these rights in individual cases.

Tax experts believe that with those powers being spelt out under the new regime, much of that discretion will be removed and taxpayers could end up paying more and being harassed to provide information - full article