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HMRC is sending letters to UK households which act as a "timely warning". Scott Gallacher, Director at Leicester-based Rowley Turton, called it a "timely warning" as landlords face receiving correspondence from the Labour Party government's tax arm. HMRC is cracking down on undeclared property income - with letters being administered to addresses where landlords live who are suspected having not paid enough tax on their income. Scott warned: "It's not uncommon to hear of amateur landlords who assume that having a repayment mortgage means there's no taxable profit. However, ignorance of the law is no defence. READ MORE Households in England waking up to letters about 'one-off' free £100 payment "HMRC's data-matching capabilities are becoming increasingly sophisticated, and landlords need to ensure they're fully compliant rather than waiting for a letter to arrive. Any landlords unsure of their tax position should speak to an accountant as soon as possible." Zoe Goodchild, CEO at London-based Innovate Accountancy Limited, said: "HMRC's campaign targeting undeclared rental income is a clear message: 'We know who owns property and we’re checking the books.' "Many landlords misunderstand the rules – mortgage repayments aren't fully deductible, and 'I didn't know I had to declare' isn't a get-out-of-jail-free card. "HMRC's data-matching across Land Registry, lenders, and other sources is increasingly precise, and this push will likely drive more landlords to seek professional advice rather than rely on shoebox accounting. “This could also be a signal of broader campaigns into other undeclared income streams, so advisers should prepare clients for proactive compliance, not reactive panic.” Michelle Lawson, director at Fareham-based Lawson Financial, warned: "This has been an age old problem. HMRC launched their Let Property Campaign for rental income disclosure giving landlords the opportunity to disclose and settle their bill with a reduced penalty. "HMRC will eventually find out and, with the upcoming pending Renters Rights Bill, landlords will likely be registering on a database. "As with everything landlord, all responsibility stops at the landlord's door so it is more important than ever before to get your ducks in line. "Many try and do self assessment but there are many benefits of using a tax adviser and or accountant to ensure everything is disclosed correctly. "As a mortgage adviser, most lenders want evidence that tax is paid by way of the tax calculations and tax year overviews and I obtain these accordingly at the outset. "I have seen customers have to repay tens of thousands in tax. So don't leave it too late or bury your head in the sand as this won't be going away."
