Plans for a new landlord database unveiled in last week’s Renters’ (Reform) Bill could provide HMRC with a gold mine of information with which to pursue landlords for unpaid tax, accountancy and business advisory firm BDO has warned.

As The Neg reported last week the Renters’ (Reform) Bill proposes a private rented sector database with details of landlords and their properties let under residential tenancies.

While the Bill does not clearly say that HMRC will get full access to all information submitted as part of the registration process experts at BDO say it is reasonable to assume that the tax authority will make use of the publicly accessible data for compliance activities.

PROFITS

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

Further property data will also become available after the Land Registry implements the new information requirements in the Levelling-up and Regeneration Bill which is also aimed at extending transparency of property ownership and transactions.

HMRC will combine any new data from the landlord database with that which it can already access such as the Land Registry’s records, the Register of Overseas Entities owning UK property and the data within HMRC’s own Connect database, which reportedly holds over 55 billion pieces of data.

PENALTIES

Data analysis should help HMRC identify cases for investigation, with a view to charging tax, late payment interest and tax-geared penalties.

Dawn Register (main picture), Head of Tax Dispute Resolution at BDO, says: “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.

“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.”