Council Exposes Landlords Avoiding £115m Unpaid Tax

Expat property investors may be in for a tax shock when they visit the UK if they have failed to pay what they owe to HM Revenue & Customs.

If they have failed to declare rental profits and gains from the sale of investment property dating back 20 years, HMRC may have a tax demand waiting for them.

Thousands of landlords have been caught out avoiding tax by a council passing their registration information under a licensing scheme to HMRC.

From the list of 27,000 landlords, HMRC found 13,000 had failed to register to pay tax on their rental profits or property sales.

The data from Newham Council, East London, has so far led to landlords paying £113 million in tax and penalties.

Unnecessary cost for landlords

Several other councils run similar schemes covering thousands more landlords and are expected to follow suit, as is another mandatory licensing scheme recently started by RentSmart Wales.

HMRC has confirmed receiving the data from Newham and the amount of unpaid tax collected.

The other councils readying to pass landlord data to HMRC include Liverpool, Waltham Forest, Barking and Dagenham, and Croydon.

The disclosures are part of a behind-closed-doors row between the council and ministers.

Former Housing Minister Brandon Lewis wrote to councils in 2015 warning them that the licensing schemes imposed unnecessary costs on property investors.

“The vast majority of landlords provide a good service and the government does not believe it is right to impose unnecessary additional costs on them, or their tenants. Such an approach is disproportionate and unfairly penalises good landlords,” he said.

Battle to renew licensing scheme

The average license is likely to cost landlords £400 for five years with a discount for portfolio properties.

Newham started the first licensing scheme in January 2013 and is applying for renewal from January 2018.

The government has already rejected an application to license all buy to lets and shared homes from Redbridge, another East London council.

The Newham mayor is trying to persuade the government that the licensing scheme has raised standards in the borough as well as much-needed revenue for The Treasury.

Since 2013, the council has prosecuted more than 1,100 housing offences, banned 28 landlords and issued more than 2,000 notices to improve homes.

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Council Exposes Landlords Avoiding £115m Unpaid Tax
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