As a property owner, it's essential to stay informed about your tax obligations, particularly concerning taxable income from lettings and gains from property sales ...
Remember, addressing any uncertainties promptly is always preferable to leaving matters with HMRC unresolved!
Recently, HMRC has begun reaching out to taxpayers it suspects may not be declaring their earnings from property-related activities. This initiative serves as a nudge, emphasising the importance of compliance and transparency with HMRC regarding property income and gains.
"Have you received a nudge letter from HMRC?"
The letter invites you to either declare your income and gains or confirm that there is nothing to declare. You have a window of 30 days from the date of the letter to contact HMRC.
This can be done by calling the number provided or using HMRC's online services. Upon reaching out, HMRC will assign you a payment reference number (PRN) which you'll need shouldn't you have any income or gains to declare.
Once you receive the PRN, you have a further 90 days to declare your earnings and settle any tax owed. This timeline allows you an opportunity to rectify potential oversights, and ensures that you adhere to your tax responsibilities without incurring unnecessary penalties.
Should you believe that your tax affairs are entirely in order and there's nothing to declare, you must still respond within the stipulated 30 days. Ignoring the letter could prompt HMRC to initiate a compliance check. Such checks can lead to invasive investigations that may unnecessarily complicate your financial affairs.
"By engaging with HMRC, you safeguard yourself from potential scrutiny!"
One important aspect of this nudge is how HMRC categorises disclosures following the receipt of their letter. Any information you provide in response to the letter is treated as a 'prompted' disclosure. This classification can affect the penalties imposed if discrepancies are found.
Essentially, if you act after receiving the letter, be prepared for the fact that HMRC's leniency on penalties may be reduced. The agency is keen on ensuring compliance, and it won't hesitate to impose additional penalties if you fail to respond adequately.
Furthermore, late payments attract interest, impacting the overall financial implications of your tax obligations. Staying in line with HMRC's requirements avoids both the anxiety of late payments and the potential for escalating fees.
"Responding promptly to HMRC's nudge is crucial!"
Whether you have income to declare or not, take the opportunity to clarify your situation within the required timeline. This proactive approach not only helps you avoid penalties, but also fosters a good relationship with HMRC.
Remember, addressing any uncertainties promptly is always preferable to leaving matters with HMRC unresolved.
Until next time ...
ROGER EDDOWES Business Godparent
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about HMRC's latest nudge letters and you want to check you're declaring the right earnings from your property-related activities, it could be a great idea to call me on 01908 774320 and let's see how I can help.
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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