Overseas landlords are evading taxes
The number of overseas landlords who have come forward to admit to tax evasion has risen 65% in the past five years, the accounting firm Moore said.
Some 390 overseas buy-to-let landlords admitted to the HMRC that they had not been paying the correct amount of taxes last year, up from 237 in 2015/16.
A total of 1,502 overseas landlords have admitted that they have paid insufficient taxes in the last five years.
The HMRC does an excellent job detecting tax avoidance.
Luci Parry, a partner at Moore, said: “HMRC’s ability to conduct cross-border investigations quickly and easily has overseas homeowners in fear, prompting many to come forward.”
“Many homeowners abroad who have fallen behind in paying their taxes do not want to be involved in lengthy and costly investigations. Especially considering that many investigations into alleged unpaid taxes lead to heavy penalties and possible criminal charges.”
“The tax affairs of buy-to-let landlords has been a key area of focus for HMRC, and it shows no signs of abating. HMRC’s latest initiative involved the mass mailing of thousands of warning letters to homeowners asking them to declare their income.”
Avoiding paying taxes is not a good idea; the HMRC has many tools to detect these frauds.
The accounting firm said these owners, many of whom are UK ex-pats rather than wealthy investors from abroad, are coming forward in response to HMRC’s ‘Let Property Campaign’.
Moore adds that HMRC has become increasingly effective at identifying landlords who do not pay the correct amount of tax on their rental income.
To do this, HMRC has been using a wide range of data sources.
The government department can also use global data-sharing initiatives to obtain bank statements from foreign bank accounts used by foreign owners to see their income.
Meanwhile, lease deposit schemes can be reviewed to compare landlords with those reporting rental income.
The Let Property campaign allows owners to come forward and report the rental income and pay any taxes owed. Once someone makes a disclosure, they have 90 days to figure out how much HMRC is owed in taxes and penalties.
The penalty for undeclared rental income is up to 100% of the amount of tax that HMRC believes is owed. If a homeowner comes forward and makes a disclosure, they are likely to face lower penalties.
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