TAX NEWS - June 2010
UK Tax: Tax return warning for landlords
Revenue officials are making increased use of Land Registry documents to determine whether or not properties sold by buy-to-let landlords are their main home. The sale of a property other than the main home may give rise to a CGT bill.
Accountancy firm UHY Hacker Young has warned landlords to be completely honest on their tax returns, and not be tempted to try to disguise sales on which CGT may be due.
The Revenue launches thousands of special investigations every year into the tax affairs of landlords that it believes owes more Capital Gains Tax. The average amount recovered from each of these investigations has risen by 79 per cent in two years, to £10,800 in the 2009-10 tax year.
Roy Maugham, a partner at UHY Hacker Young, said that the increase is surprising given the widespread slashing of asset prices seen during the credit crunch. He said: "It shows how aggressive HM Revenue and Customs is becoming in tackling tax evasion in this area."
Once an investigation has been launched, HMRC are delving further into each landlord's affairs - often going back through more than 20 years' worth of records.
Capital Gains Tax particularly affects buy-to-let landlords and property investors, but it remains widely misunderstood. Landlords are being advised to seek professional help from an accountant if in doubt..