Last Updated on January 31, 2015 by admin
Landlords including holiday letting owners are under scrutiny because the Revenue estimates that £500m is lost every year through underpayment of tax on rental income and undeclared capital gains on second properties.
Last year HMRC said that 40,000 landlords were suspected of bending the rules. HMRC has continued to urge property landlords and holiday letting owners to bring their tax affairs up to date.
They are encouraging holiday homeowners to close the gap by signing up to their Let Property Campaign, which allows landlords to claim the best possible terms on any outstanding tax for their holiday home, for more information please visit our blog post at:
With the website already receiving thousands of visits and many holiday homeowners having signed up to the campaign it is certainly worth exploring.
If you’re currently unsure if you have unpaid taxes for your holiday home or you should be declaring taxes under this scheme you can visit the link below:
You’ll answer a few simple questions and be given guidance that is specific to your own circumstances.
There is little doubt that if you are a regular reader of this blog you’re a conscientious holiday homeowner and declare your furnished holiday lettings income in the proper manner. However there is always the chance that you may be selected for a tax investigation, here’re a few pointers to consider if you are.
What happens if you do have a tax investigation?
- Don’t Panic!
The first thing to do is remain calm; whilst tax investigations can be triggered by discrepancies in your numbers, they can also be carried out at random.
Tax investigations are broken down into three distinct categories; aspect, full and random. Aspect investigations will look into one or more areas of your tax, whilst full or (full) random investigations will examine your tax return in its entirety.
Each should be treated seriously and it is important to identity from the start which procedure is relevant to your enquiry.
- Get an accountant before contacting HMRC
HMRC recommends that small business and holiday homeowners seek the advice of a professional in order to limit the potential costs an investigation could have.
It is important to take stock and be thorough. Your accountant will be able to provide the necessary information as quickly as possible, but only once they have a full understanding of your affairs.
Rushing this process or doing it without the aid of a specialist professional could lead to you incurring considerable costs should things go wrong.
- Talk to HMRC when you are ready
You will have 60 days in which to respond to HMRC. Only when you are ready, and fully armed with all of the information you need, will it be time for your accountant to make contact.
As holiday home insurance specialists we understand the needs of holiday letting owners and our policy includes valuable legal expenses cover for HMRC tax investigations provided that the insured has taken reasonable care to submit complete tax returns within statutory time limits. For more information on how a specialist insurer can help and support your holiday home business, please give us a call on 01237 429444.
Here are some helpful links on the Furnished Holiday Letting Tax Rules:
- How to qualify under the Furnished Holiday Letting Tax Rules from Boshers Holiday Home Owner Blog
- Furnished Holiday Lettings Tax Guide from Boshers Holiday Home Owner Blog
- Furnished Holiday Lettings – advice to owners PDF from Francis Clarke Chartered Accountants
Please note that this article gives only an overview of Tax Investigations – what to do when the taxman knocks and we suggest you take advice from a qualified professional before making any decisions in this area.