Residential landlords are the latest group to have been targeted in receiving ‘nudge’ letters from HM Revenue & Customs (HMRC).
The letters are part of a targeted campaign by HMRC to remind landlords of their obligation to declare their rental income.
What is a ‘nudge’ letter?
HMRC has used what have become known as ‘nudge’ letters since 2017. These communications are designed to prompt a response from the recipient by offering reduced fines for a declaration of undeclared income or gains.
The letters being sent to landlords suggest they review their tax position and include a certificate of tax position to be completed and returned, typically within 30 days.
Failure to reply could lead to fines, a further investigation or in more serious cases criminal prosecution.
So far around 1,000 property owners suspected of not declaring rental income have been sent a ‘nudge’ letter.
Evidence gathered via online data tracking
The evidence behind this recent campaign was gathered through online booking platforms like Vrbo and Airbnb. Such sites are obliged to share information on registered users and their financial transactions with HMRC.
Issuing the letters is a way to give taxpayers a chance to rectify any discrepancies and pay tax on undeclared income.
If you have received a ‘nudge’ letter from HMRC it is important to seek professional advice on the matter.
Need professional advice on property tax issues? Ask our team.