A leading accountancy firm has claimed that landlord tax evasion on rental income has nearly doubled over the past 12 months to an average of £4,480.
The claim is made by London-based national firm UHY Hacker Young, which specialises in several business sectors including property.
The increase in tax evasion by landlords is surprising. HMRC has been leaning heavily on landlords to come clean about previous tax evasion activity recently via its ongoing Let Property Campaign.
It’s been running since 2013 and enables buy-to-let landlords and the owners of holiday homes to voluntarily disclose unpaid tax while simultaneously threatening them with huge fines if they don’t.
The campaign recently revealed said it believes that 1.5 million of the UK’s 2.5 million landlords are underpaying their tax or not paying it at all.
It has also been mailing out thousands of letters to landlords its algorithm believes may be hiding rental income from the tax authorities. It uses data gleaned from lettings agents, holiday lettings websites, bank accounts and tax returns.
Airbnb, for example, has provided HMRC with details of its 225,000 UK hosts.
Clive Gawthorpe (pictured), Partner at UHY Hacker Young, says: “When landlords who are hiding income get a warning letter from HMRC, they realise that HMRC is closing in on them and [that] they can no longer hide.
“If a landlord decides to come forward under the campaign, it’s better to do it with professional advice, particularly if their tax affairs are complex. This will be key in helping avoid any mistakes and the possibility of further investigations by HMRC.”