New landlord database and HMRC

As part of the Renters’ Reform Bill, which was recently introduced into Parliament, it was announced that the Government is planning to launch a new landlord database, which could enable HMRC to pursue landlords for unpaid taxes.

The planned launch of this new landlord database could supply HMRC with ample information with which to pursue landlords for any unpaid tax. The rental property portal will provide details of landlords and the properties let under their residential tenancies.

Whilst the Bill does not clearly state that the HMRC will be allowed full access to all information submitted as part of the registration process, it is a reasonable assumption that the tax authority will make use of the publicly accessible data for compliance activities.

HMRC is keen to ensure landlords declare their rental profits and gains on any sale, so that they are liable for any tax they owe. This encourages those landlords who have made mistakes, the ability to voluntarily correct their position by using the Let Property Campaign, part of HMRC’s Digital Disclosure Service, or other available disclosure processes.

Landlords should be aware therefore, that further property data will become available after the Land Registry implements the new information requirements in the Levelling-up and Regeneration Bill, which is also aimed at extending total transparency of property ownership and any related transactions.

HMRC will combine any new data from the landlord database with the records it already has access to i.e., from the Land Registry, the Register of Overseas Entities owning UK property and the data within HMRC’s own Connect database, which is estimated to hold in excess of 55 billion pieces of data. Data analysis should help HMRC identify cases for investigation, with a view to charging tax, late payment interest and tax-related penalties.

Dawn Register, Head of Tax Dispute Resolution at BDO - an accountancy and business advisory firm said: “HMRC already holds significant information on taxpayers’ financial affairs. The introduction of a new private rented sector database will leave few places to hide for landlords who don’t comply.

“Any landlords who don’t currently pay the right amount of tax would be well advised to bring their UK tax affairs up to date before the register is introduced.

“In addition to providing peace of mind, making an unprompted disclosure should lead to lower tax-geared penalties for errors, compared to rectifying mistakes after HMRC gets in contact. It will also help to mitigate late payment interest – which is currently at a 14-year high of 6.75% per annum and due to rise to 7% from 31 May.”

If you wish to discuss this in further detail, please contact our Property Management Office on Tel: 020 7354 9222 at 235 Blackstock Road, London N5 2LL, or email theo@davidandrew.co.uk