13-05-2007, 17:01 PM
"Accountants expect Revenue & Customs to use the tenancy deposit scheme, launched last month and compulsory for all landlords, to gather information on their names, addresses and rent and then cross-check it against their tax records."
Well it's was inevitable really but interesting to see it in the papers.
13-05-2007, 17:31 PM
That's why some landlords have stopped taking deposits ;)
13-05-2007, 18:53 PM
It's an interesting theory but one which in my opionion has been blown-up out of proportion by the media, mainly due to some clauses in the contracts of deposit schemes.
The Inland Revenue (HMRC now) are indeed having a campaign regarding landlords who they suspect are not declaring rental income - these are in the main amateur landlords with the odd buy-to-let or a property abroad.
Anyone who has rental income and does not declare it, to the penny, is an absolute fool. The chances of being found out are very high, if not in the short-term, then certainly in the long term - most fraud of this type comes to light when people shop them - namely disgruntled tenants, neighbours and ex spounces.
On the other hand, the actual amount of tax liablity is likely to be low if all the allowances are claimed, particularly mortgage interest paid. Part of the problem I suspect is that many people who hold just one rental property, being employees, have never completed a tax return, so through either sheer ignorance or pure lazyness, just don't bother.
Secondly, just think of the extra work HMRC will be put to to cross check hundreds of thousands (perhaps over 1m) landlords between the two agencies. Ask anyone who works in a tax office and I'll guarantee they will tell you they are hardly coping with their present workload, never mind this lot on top. Perhaps one day, but not yet.
HMRC need to improve their efficiency by several leagues before that time. When they can hand out £6.5 billion, of our hard earned, paid in good faith tax cash, in over-payments on Tax Credits, how do you think they will cope with this lot - give them a break!
Third, not all landlords will use the new deposit schemes. There is no law which says you must take a deposit, and quite frankly when tenants cancel their last month's rent, landlords are no better off with one.
Some landlords won't take deposits at all in future.
Already insurance companies are coming up with alternative insurance schemes for damage which would otherwise have been covered by depsoits.
I suspect, when the deposit schemes really get going, many more landlords will be put off once they have experienced the unprecedented levels of bureaucracy which accompanies them.
Time will tell, but as the president of the National Federation of Residential Landlords has commented recently, the legislation was rushed through with little or no consultation with landlord bodies or debate in the house and appears completely flawed and unblanced with virtually no benefits to landlords at all.
To Quote old Abe Lincoln: "Let me not be understood as saying that there are no bad laws, nor that grievances may not arise for the redress of which no legal provisions have been made. I mean to say no such thing. But I do mean to say that although bad laws, if they exist, should be repealed as soon as possible, still, while they continue in force, for the sake of example they should be religiously observed.
Abraham Lincoln (1809 - 1865)
13-05-2007, 19:45 PM
If you are fiddling your tax you may as well not bother with the TDS either. In for a penny in for a pound.
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