HMRC Quizzes Tenants About Expat Landlord Tax

Lisa Smith, BA (Hons), CeFA

Buy to let tenants are being urged to turn whistle blowers to help the tax man crack down on rogue landlords.

HM Revenue & Customs is writing to thousands of tenants suggesting they should deduct income tax from their rents, claims the Chartered Institute of Taxation (CIOT).

And the fact-finding operation does not stop there.

Thousands of letters have gone out to tenants who live in buy to let or shared accommodation which expat landlords are suspected of owning.

Penalty threat

The letters are with a form demanding the tenants tell the tax man who owns the property they live in, if the home is owned by a trust, and if so, who runs the trust and benefits from the rents.

HMRC is also cross checking the information sent back by tenants to see if expat landlords belong to the Non-Resident Landlord Scheme. (NRL).

If they don’t a follow-up goes out to the tenants or letting agents managing the property requiring that they deduct income tax from rents of more than £100 a week and pay the tax direct to HMRC.

The letters come with a threat of penalties if tenants do not disclose information about their landlords, which HMRC has agreed to drop following intervention from CIOT.

Brian Slater, chair of CIOT’s Property Taxes Sub-committee, said: “The letters are likely to confuse tenants when there is no letting agency contracted to let the property and they have to deal with such requests from HMRC themselves.

No obligation to respond

“It is unlikely the individual tenant would know the answers required of many of the questions on the form unless they are closely connected to the landlord, say a relative. We are concerned that a tenant who receives this letter may be worried about how to respond, particularly if they do not have enough information or knowledge to answer the questions.

“A tenant may not know that the landlord’s usual place of abode is outside the UK and, even if they do, how will they know about their tax obligations? The wording at the end of the letter about errors and penalties could also alarm the recipient especially if they are not able to answer all the questions.

“HMRC suggest tenants should reply ‘not known’ if they do not know the information for specific questions. There is no legal obligation to respond to the letter and questionnaire but the response will enable HMRC to help the tenant if further action is required or to quickly tell them that no further action is required.”

Leave a Comment