HMRC Quizzes Renters In Expat Landlord Crack Down

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Expat landlords are facing a crackdown as the tax man grills tenants about their finances.

HM Revenue & Customs has sent thousands of letters to buy to let renters in the UK demanding they pass on personal and financial information about their landlords.

The letters also warn that they might have to deduct income tax from the rent they pay – and if they don’t, HMRC will fine them.

HMRC has identified private rented homes owned by expat landlords or offshore companies and wants to check that the right amount of tax is paid on rent profits.

Tenants must tell HMRC their landlord’s contact details, how long they have rented their home and how much they pay in rent.

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Withholding rent

The tax man is trying to find landlords avoiding tax who are outside of the Non-Resident Landlord scheme (NRLS)– a program that monitors expat landlord self-assessment tax returns.

Landlords must register for NRLA if they spend six months or more outside the Britain, even if they remain UK tax resident.

Under the scheme, HMRC can revoke an expat landlord’s right to file a self-assessment tax return in favour of their tenant or letting agent withholding some rent, providing they pay the landlord more than £100 a week.

The withheld rent is then paid direct to HMRC.

Andrew Hinsley, of tax adviser RSM UK said: “This is incredibly distressing for tenants, who may be led to believe their landlord is not paying the correct amount of tax. This is yet another example of taxman aggression.

Innocent errors

“These letters are not targeted – HMRC is just fishing for information – so tenants are worried they are not complying, even in cases where the landlord has already settled the bill via an agent.”

If tenants fail to comply, HMRC can fine them and make the responsible for paying the landlord’s tax.

“These letters form part of targeted compliance activity to ensure that offshore owners of UK property are aware of and comply with their UK tax obligations,” said an HMRC spokesman.

“HMRC is contacting both the overseas owner and any occupant of the property to provide information and help put right any innocent errors made. We understand that some areas of tax can be complex and we want to help customers pay the right tax at the right time, ensuring the continued funding of vital public services in the UK.”

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