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HMRC interventions begin targeting property letting

Accountant and business adviser PKF is urging those who receive an ‘intervention’ letter not to ignore it – even if they have not made profits on their letting.

The campaign is one of a series of new interventions designed to avoid lengthy, traditional tax investigations. HMRC has sent out the first batch of letters, which will be arriving on people’s doorsteps shortly.

John Cassidy, PKF tax investigations partner, says, ‘We have already seen HMRC use its powers to require banks to provide information regarding specific or unnamed/unknown taxpayers holding offshore bank accounts. Now HMRC is becoming more active in using government data from stamp duty land tax returns and other sources to pinpoint individuals who may be letting properties but do not declare rental income on their self-assessment tax returns.’

Cassidy points out that while HMRC cannot be certain that these individuals have made profits and that there is no legal requirement to respond to such letters, ignoring such a letter may be counter-productive. Once HMRC has identified a tax risk, it is unlikely to let go until the issue is cleared up.

He says, ‘Over the past few years, HMRC has geared itself towards tackling tax evasion and avoidance, and it intends to use the information it has to seek out evaders in a systematic fashion across the board. Those who did not receive a letter this week and believe they may have escaped HMRC’s grasp should note that this is only a pilot exercise for ongoing interventions that will start later this year.’

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