British taxpayers with holiday homes overseas are running out of time to inform HM Revenue and Customs about unpaid tax and capital gains.
The Property Sales Campaign is the last chance for them to tell HMRC about any rents or gains they may have made and not declared on their tax returns.
However, the clock is ticking down and they must sign up for the deal by August 9, 2013 and pay any tax due by September 6, 2013 to avoid increased penalties.
HMRC is threatening that holiday home owners failing to sign up to the discount deal face tax investigations plus extra penalties, fines and interest will be added to any tax they owe.
For tax offenders considered to be deliberately evading tax, criminal prosecutions may follow, says HMRC.
Tax deal
“The Property Sales Campaign is a chance for taxpayers to come clean if they have not told HMRC about rental profits or capital gains from selling a property overseas,” said an HMRC spokesman.
“If holiday home owners have made gains or profits and not declared them, they have probably paid the wrong amount of tax.
“The terms of the deal mean if these people come forward now, they will not face penalties that are as severe as those that will be in place once the campaign closes. It’s in their interest to make a declaration and pay the tax.”
HMRC has recruited teams of extra inspectors to look at tax avoidance – and some have been working collating evidence about holiday homes overseas for some months.
HMRC has several sources of information, including information exchange agreements with foreign governments.
Database tip-off
The biggest resources are mortgage lenders, letting agents and the internet. HMRC has specialist software to search the web for information about holiday homes let by UK taxpayers.
Accountants UHY Hacker Young have warned that they were tipped off that HMRC is building a database of undeclared holiday homes.
Mark Giddens, head of private client services at the firm, said: “Property investors should not take the HMRC warning lightly. HMRC realises property people are not declaring their profits and is concerned that this is a significant amount of money can be recovered. The amount of tax collected from second homers has increased by 10% recently and is expected to raise more.”
Click here to notify HMRC about capital gains tax or tax on rents under the Property Sales Campaign
