Property tax records come under scrutiny

Property investors can expect a call from the tax inspector to check out their business record keeping under new campaign kicking off at the end of month.

HM Revenue & Customs is concerned that small business record keeping is not adequate – including bookkeeping and accounts maintained by buy to let landlords, house in multiple occupation (HMO) managers, flat management companies, property developers and holiday let owners.

The problem is lack of knowledge over keeping records and claiming reliefs and allowances.

According to a recent freedom of information inquiry, landlords claim around £6.5 billion in interest charges and £13.8 billion in expenses every tax year.

They also receive rent and housing allowance of around £9 billion a years.

Even small errors in accounting for such massive figures can generate large errors in tax due or reclaimed.

To stamp out these errors, HM Revenue & Customs will start checking small business records from November 26, 2012.

Initial contact will be a telephone call to discuss business record keeping – if the answers trigger concern for HMRC, a tax inspector will follow up the call three months later.

This visit could lead to compliance checks and fines for failing to keep correct business records.

A trial campaign between April 2011 and February 2012 checked out 3,430 businesses. Record keeping problems were identified at 36%, while 10% had serious problems needing follow-up visits.

HMRC’s Director of Local Compliance Richard Summersgill said: “We’ve listened to businesses and agents, and revamped our business records checks programme to make it more streamlined, targeted and better focused on education.

“The visits offer benefits for businesses at risk of keeping inadequate records. Adequate records help businesses pay the right amount of tax at the right time, thereby avoiding interest and penalties for errors and late payment, whilst also giving HMRC greater assurance when a business submits its tax returns.”

Prepare for the business check by downloading HMRC’s record keeping guide (Opens in new window)

Tags:

About Editor

Feel free to send comments or requests for content to the Landlord Syndicate editorial team

One Response to “Property tax records come under scrutiny”