Tenants are being warned that they must not ignore a letter from the HMRC that may be sent to them asking for further information on the property that they rent, including whether it is owned by a trust and if so, what date the trust acquired it and asking for details of the trustees and beneficiaries.
Further information on the advice being given by the Chartered Institute of Taxation on this letter can be found here: https://www.lettingagenttoday.co.uk/breaking-news/2019/11/tenants-warned-not-to-ignore-snooping-hmrc-letter-about-landlords.
Fact-finding letter not to be ignored by tenants
The fact-finding letter is being sent by HMRC to tenants, along with a form asking for more information on the rented property, to make sure that the correct amount of tax is paid by their landlord if they are not resident in the UK and not registered under the UK’s Non-Resident Landlord Scheme.
Penalty fine warning
Tenants who fail to respond to the letter may find themselves having to pay tax out of their rental payments or face having to pay a penalty fine.
As tenants are not likely to know many of the answers to the questions being asked in the form, it is strongly advised that they contact HMRC or take professional advice from a qualified tax advisor.
Getting professional help
Professional advisors wanting to make sure that they can help tenants and landlords comply with the requirements of HMRC may wish to use property inventory software such as https://inventorybase.co.uk which has a wide range of interactive web reports and other functionalities such as digital signatures to make sure that all information on a rental property is accurately recorded.
HMRC has said that it will amend the letter to remove the threat of penalties for tenants who fail to reply, but the threat of penalties where it is not considered by HMRC to be a genuine mistake stills remains. By recording details of the property with some property inventory software helps reduce this risk.
What to reply
The wording of the letter about errors and penalties could be worrying for tenants who may not know the whereabouts of their landlord or what their tax obligations are. HMRC are advising that tenants should answer questions to the best of their knowledge and put ’not known’ to questions that they are unsure of.`