Rogue landlords have been accused of tax evasion which could cost the Treasury as much as £1.73 billion a year.
The accusation comes from Tax Watch, a think tank which describes itself as “the UK’s only charity dedicated to compliance and sound administration of the law in the field of taxation.”
A report published by the charity this morning says the last time the government completed an estimate of tax evasion in the buy to let sector was back in 2013, when it suggested up to 1.5m landlords may have been failing to declare income – leading to an unpaid ‘tax gap’ of £540m.
Tax Watch’s analysis of how HMRC compiled the figure in 2013, complemented by more recent data, leads it to calculate that the current figure of tax evasion is £1.73 billion – over three times the amount revealed in 2013.
The think tank charity adds that HMRC’s long-running Let Property Campaign, which involves pressing landlords to ‘come clean’ on unpaid tax, has been largely ineffective.
It says between 2013 and 2019 some 35,099 people made voluntary disclosures to HMRC in response to the Let Property Campaign – only 2.3 per cent of the individuals originally identified.
To identify tax liability, the charity demands a UK-wide landlord database, and it particularly praises the licensing scheme created by Labour-controlled Newham Council as a way of monitoring landlord and property numbers.
“The government has been extremely reluctant to roll out licensing schemes used by boroughs like Newham nationwide, deeming it to be an unnecessary regulatory burden on landlords” claims Tax Watch.
It advocates a UK-wide database akin to National Insurance, with each property to let having a unique number which would have to be used by BTL mortgage lenders, licensing authorities and buyers.
This post has originally been featured in Letting Agent Today.