HMRC Intends Landlords` Tax Checks To Be `Bedfellows` With Licensing Schemes

Date Published 21 February 2018

A consultation has just been launched by the HM Revenue & Customs on the addition of tax checks to landlord licensing schemes, just to make sure that they are paying the 'correct' amount of tax.

The government has published a consultation document saying it appreciates the majority of people pay their fair share of tax, however it is aware that a small minority are not owning up to their true income, which it describes as the 'hidden economy'.

The HMRC says that the best way to cut down this practise is to stop it from happening in the first place, and to stamp down hard on those flouting the tax rules.

The HMRC thirty seven page document includes the suggestion that when landlords apply for an HMO (Houses in Multiple Occupation) licence, part of the process of being accepted could hinge on the fact that applicants are paying their correct amount of tax. If any landlord is proved to be non-compliant with tax rules they will be stopped from renting out any of their portfolio.

The document states that the government 'values the private rented sector and wants to see a strong, healthy and vibrant market, which meets housing needs in a professional way. This includes ensuring that landlords are reporting and paying the tax they owe.'

Below are the HMRC's key points taken from the document:

• New applicants should be signposted towards tax obligations and HMRC services: Checks applying to first-time applicants aim to ensure that they understand their taxable status and are able to register as soon as possible after they begin trading.

• Checks should apply to those renewing licences: Checks carried out at the renewal stage would ask applicants to confirm and provide evidence of their tax-registration status.

• No requirement upon licensing authorities to carry out more detailed tax checks: The government would not expect licensing authorities to provide advice to applicants on their tax status. Applicants requiring particular support or advice could be directed towards appropriate HMRC services.

The consultation will be closed on March 2nd and you can access the full document here.