Author : Marry-Anne Bowring
The news making the rounds is that the Renters Reform Bill has proposed launching a new landlord database. Imagine the reams of data that the HMRC can access through this new database. HMRC can potentially use it to go after landlords who are not up to date on taxes due to the government. It is extremely likely that the government will use the information available through the landlords' database proposed by the Renters Reform Bill to identify those who have not made tax payments. However, there is no clarity on whether the HMRC will get access to the landlord database, which will be created from the information submitted as part of the registration process.
The Register of Overseas Entities, which works on nearly the same lines as the proposed database, gives HMRC full and automatic access to all available information. That's why it is reasonable to assume that the HMRC will use any publicly accessible landlord data for compliance actions. HMRC wants to check landlords declare their rental profits and capital gains on sale so the tax they owe to the government can be quickly assessed and collected. It encourages those who have made mistakes in tax payments to voluntarily correct their tax position by using the Let Property Campaign. This campaign is part of the HMRCs Digital Disclosure Service. Other disclosure processes are also available for those who want to use them.
More property data will also become available to the authorities after the Land Registry implements the new information requirements in the separate Levelling Up and Regeneration Bill. This move is aimed at extending transparency of property ownership and transactions. HMRC will compile and compare the information available from the landlord database's existing and new data. The existing information is accessed from the Land Registry records, the Register of Overseas Entities Owning UK property, and the data within the HMRCs Connect database. This database reportedly has over 55 billion pieces of data.
This wealth of data analysis should help HMRC identify those landlords who should be investigated. Based on the findings, they must pay tax, late payment interest, and tax-geared penalties. HMRC already has volumes of data about the financial transactions of landlords. Introducing a new private rented sector database will ensure landlords have little scope to fudge their data and accounts. I have urged landlords who have defaulted on tax payments to update their payments before we introduce the register.
This will not only earn them the respect of the authorities but also provide peace of mind. In the UK, an unprompted disclosure results in lower tax-geared penalties for errors. Landlords won't enjoy this benefit after HMRC gets in contact and I forced them to make tax payments. A voluntary disclosure will also save landlords the hassle of late payment interest, which is currently at a 14-year high of 6.75 percent per annum and is due to rise to 7.0 percent from May 31.
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