In the early part of 2016, I co-presented a number seminars aimed at landlords and property owners to talk about the tax changes that were going to affect landlords from April 2016. During the presentation I made a few light hearted comments about being ex-HMRC which, as always, were taken in good spirits by the audience.
notices from HMRC, along with landlords who were in the middle of long running enquiries with HMRC that don’t seem to be getting anywhere. They were keen to talk about their enquiries and what they should be doing and, of course, I was happy to chat through things with them.
It is fairly common knowledge that landlords have been the taxman’s “flavour of the month” for several years now, and this is mainly because HMRC have a direct link into the land registry records. The letters that are being sent out by HMRC are affecting landlords and property owners who have carried out transactions in property but are not registered for tax, or who have sold property but, for whatever reason, did not report the transaction on their tax return.
But more worrying is the fact that HMRC is now routinely writing to landlords and property owners in cases where they do not believe that the rental income shown on their tax return is in line with the number of properties that they believe they own. Enquiries of this nature can seem very innocent and potentially easy to deal with, which is why a great many people decide to deal directly with HMRC, without speaking to their accountant. I have to say that this is often a bad idea! HMRC staff are highly trained individuals who are tasked with the job of policing the tax system. They are naturally suspicious because they will have dealt with lots of cases that involve tax avoidance and evasion. A tax inspector’s starting point in an enquiry is to assume something is probably wrong. Make no mistake, you might be whiter than white when it comes to tax, but the inspector won’t think like that. I know I didn’t!
I am currently acting for several landlord and property clients ranging from people who have not been entirely forthcoming with HMRC, to people who have been suspected of under-declaring their income and gains when this isn’t the case. The important thing to note is that it is possible to resolve any enquiry with HMRC, providing you have appointed an agent who is completely at home with dealing with all aspects of HMRC enquiries and fully understands the Tax Inspectors thought processes and actions. It is a fact that HMRC always prefer to deal with an experienced investigation specialist as the case is almost always settled much quicker and with a fair result.
I left HMRC in 2004 having spent 23 years in the department and 15 years as a senior investigator. In addition to running the tax department at Raffingers, I specialise in looking after people who are the subject of a HMRC enquiry. If you have any current involvement with HMRC, then I am more than willing to have a chat with you to make sure the case is progressing ok or to offer general advice. Any initial discussions or meeting (which would be at Raffingers offices in Woodford Green) are without charge and free of obligation. To arrange a meeting, please contact me direct on 020 8418 2671 or email me at firstname.lastname@example.org.
And finally, a cautionary tale. One of my (new) clients received a letter from HMRC. There was very little wrong with his tax return and all of his rental income had been declared so he decided to contact the Inspector of taxes who turned out to be charming and very chatty. But the more that he spoke to the Inspector, the more questions he had to answer, and then he found himself being asked to provide a host of documents, invoices, and bank statements going back several years. When he couldn’t comply with the Inspector’s information notices he was issued with assessments and penalties that totalled just under £25,000. Admittedly most HMRC Inspectors are not as over-zealous as this particular chap, but it does go to show that you run a huge risk dealing with HMRC without a qualified advisor on your side. We are currently unwinding the Inspector’s assessments and penalty charges and the final amount payable will be less than £1,200.