Mon, 08 Jul 19
The number of Edinburgh landlords admitting to not paying tax has soared in the past year, according to new data.
During 2018/2019, 171 landlords in the Scottish capital declared unpaid tax, up from 101 in 2017/18, as reported by Edinburgh Evening News.
It is believed the 69% rise in Edinburgh landlords declaring unpaid tax is due to HMRC's promotion of its Let Property Campaign via letters sent to those suspected of avoiding or underpaying tax.
The campaign, in operation since 2013, offers landlords lower penalties if they make a full disclosure rather than waiting for HMRC officials to discover they have not paid enough tax.
"[The] focus on Edinburgh’s buy-to-let landlords is clearly intensifying, as the buy-to-let market is becoming a key source of unpaid tax for HMRC," says Mark Giddens, partner at accounting group UHY Hacker Young.
"The number of landlords in Edinburgh coming forward and declaring unpaid tax suggests this is paying off."
"Under-declaring rental income and failing to pay Capital Gains Tax on the sale of buy-to-let properties has seen some landlords in Edinburgh slapped with heavy penalties and even sentenced to prison," he says.
"Landlords are wise to contact HMRC and declare unpaid taxes, rather than facing big fines and possible criminal prosecution."
"HMRC is now ignoring the heavy administrative work involved in establishing and prosecuting tax fraud and showing their intent to expose any buy-to-let landlords that ignore their tax duties," adds Giddens.
Let Property was originally intended to run for just 18 months but has been extended indefinitely.
At the time of its launch, HMRC estimated that up to 1.5 million landlords across the UK were underpaying tax worth as much as £500 million a year.
However, earlier this year, Freedom of Information requests made by accountancy firm Saffery Champness revealed that in the first five years of the scheme's operation, just 35,099 people made voluntary disclosures to HMRC, only 2.3% of the individuals originally identified.
Meanwhile, of the estimated £500 million in underpaid taxes only £85 million was recovered between 2013 and 2018.
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