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Taxman Investigations

Tuesday, 27th January, 2015

Tax investigations - undertaken when officials believe there is evidence of underpayment - are resulting in records hauls of capital gains tax.

Failures by owners of buy-to-let property to declare gains and pay the appropriate tax are believed to be behind the trend. Figures obtained by a firm of accountants show HM Revenue & Customs' tax inspectors obtained 136 million as a result of probes into underpayments of capital gains tax for the year 2013-2014. The marks a 24% increase for the previous year, when 110 million was collected.

The sharp upsurge has been pinned on the taxman putting increased resource into stepping up its scrutiny of private landlords.

Soaring property prices has helped fuel bigger profits for buy-to-let investors in recent years and the revenue suspects tens of thousands are unaware of the tax due, or are bending the rules and understanding their capital gains, according to Mark Giddens, a tax partner at UHY Hacker Young, the accountancy group which obtained the data.

"There are a significantly greater number of buy-to-let landlords and private property investors in the UK than was the case 10 years ago, and they make tempting targets."

Fewer than 500,000 taxpayers are registered with HMRC as owning second properties. The taxman estimates that the true number of landlords is much higher, at around 1.5 million, and wants to close the gap.

HMRC has been very public about its clampdown on landlords. It has run a number of campaigns warning those who fail to pay sufficient tax on either rental income or capital gains.

Last August the taxman sent 40,000 letters to landlords it suspected were bending tax rules.

The letters warned landlords to put their affairs in order or else run the risk of a large fine or a criminal investigation. 


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