HM Revenue & Customs (HMRC) underlined their commitment to track down property investors suspected of avoiding tax in two early morning raids in East London.
In the raids, two men were arrested as part of an investigation into an alleged capital gains tax fraud.
HMRC stated that the investigation involves failing to declare CGT on a string of property sales.
Alan Tully, Assistant Director, Criminal Investigation, and HMRC, said: “We are investigating what we suspect is a large-scale, organised tax fraud to steal £1 million of taxpayers’ money.
“Today’s operation is part of a HMRC property task force campaign to clamp down on those believed to be dodging capital gains tax. It sends out a clear message – we will relentlessly pursue those believed to be involved in fraud.”
Meanwhile in advance of the raid, HMRC warned that only 500,000 private landlords are registered under self-assessment although HMRC estimates the number is nearer 1.5 million.
“There are a significantly greater number of buy to let landlords and private property investors in the UK than was the case 10 years ago, and they make tempting targets,” said a spokesman.
HMRC’s capital gains tax take is growing fuelled in the main by rising property prices.
CGT paid in 2012-13 was £3.9 billion, estimated to rise to £6.7 billion next year and reach £9 billion in 2018-19.
Tax changes relating to second homes and letting properties will add to the amount of tax generated by house price inflation.
Since April 2014, the 36 month CGT exemption for owners who had previously lived in a property as their main home was cut to 18 months.
And from April 2015, expats will have to pay CGT on gain from that time of the sale of property in the UK.
HMRC has already written to around 40,000 landlords suspected of dodging tax and is putting together a hit list of tax avoiders from information provided by buy to let mortgage lenders, letting agents, local authorities and the Land Registry.
The HMRC spokesman said: “Our inquiries are extremely effective as these figures show.”
— LandlordZONE (@LandlordZONE) January 16, 2015