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tax checks to private rental sector licensing schemes

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Thu 14 Dec 2017

tax checks to private rental sector licensing schemes

HM Revenue & Customs has launched a consultation on adding tax checks to private rental sector licensing schemes - in other words, checking up on landlords to ensure they are paying their fair share of tax.

The government’s consultation document says the majority of UK taxpayers pay what they owe, but a small minority are active in the ‘hidden economy’ - tax dodging, in other words. 

It says the best way to tackle non-compliance is to prevent it happening in the first place, while cracking down on the minority who do break the rules.

The 37-page document includes a possibility that applying for HMO licences could also involve ensuring applicants are compliant with tax laws before renting out properties. 

The consultation says the government “values the private rented sector and wants to see a strong, healthy and vibrant market, which meets housing needs in a professional way. This includes ensuring that landlords are reporting and paying the tax they owe.”

HMRC says there are four key points:



1. First-time applicants may be told to ensure that they understand their taxable status and are able to register as soon as possible after they begin trading as a landlord;

2. Those renewing licences will have checks carried out to confirm and provide evidence of their tax-registration status;

3. The emphasis would be put on the landlord applying for a licence to ensure they show  proof of tax registration and payment;

4. Licensing authorities - usually local councils - would not be expected to conduct tax checks but would be expected to ensure representatives see evidence of tax registration before the granting of new or renewed licenses. 

The closing date for consultation is March 2