The Let Property Campaign (LPC) is scheme set up by HMRC, offering the opportunity for landlords to get up to date with their tax affairs. Whether landlords let out residential property, in the UK or abroad, this simple way to disclose income or any unpaid tax provides the most practical way to avoid any large penalty fees whilst keeping your affairs in working order with HMRC.
By registering with the Let Property Campaign, landlords will have 90 days to submit all relevant information relating to their income and tax, before a proposal is issued by HMRC to pay what is owed.
We break down exactly what the Let Property Campaign is, why it was introduced by the government and what are the consequences for landlords should they choose not to declare if outstanding taxes are owed.
What Is The Let Property Campaign (LPC) & Who Does It Affect?
The Let Property Campaign offers the best possible terms available to get your tax affairs in order. By going through this formal government process, if any late penalties are issued, it is likely to be lower than it would be if HMRC finds out you have not paid enough tax. The Let Property Campaign is an opportunity open to all residential property landlords with undisclosed taxes. This includes:
- those that have multiple properties
- landlords with single rentals
- specialist landlords with student or workforce rentals
- holiday lettings
- renting out a room in your main home for more than the Rent a Room Scheme threshold
- those who live abroad or intend to live abroad for more than 6 months and rent out a property in the UK, as you may still be liable to UK taxes
This campaign is not open to those landlords who are letting out non-residential properties such as a:
- shop
- garage
- lock up
You also cannot use the Let Property Campaign if you want to disclose income on behalf of a company or a trust.
Unlike previous campaigns, there is no disclosure ‘window’ requiring you to disclose what you owe by a specific date.
This campaign will be ongoing for some time, landlords intending to come forward who delay, risk higher penalties if they are subject to an enquiry and they have not already notified an intention to disclose. If you cannot afford to pay what you owe in one lump sum, depending on your circumstances, you’ll be able to spread your payments.
If you registered for self-assessment and completed tax returns within the appropriate time limits, but have simply made a careless mistake when declaring your income, you only pay for a maximum of 6 years – no matter how many years you’re behind with your tax affairs.
However, if you do not come forward and HMRC finds later that you’re behind with your tax, it may be harder to convince them that it was simply a mistake. The law allows HMRC to go back up to 20 years and in serious cases HMRC may carry out a criminal investigation.
Why Did The Government Introduce The Let Property Campaign (LPC)?
When the LPC, or Let Property Campaign, began in 2013, it was estimated that up to 1.5m landlords had underpaid or failed to pay the correct amount of tax. Since then, in 2018 HMRC discovered 8704 landlords had either underpaid or failed to pay income tax on rental income, rising to 11,129 in 2019. Through the LPC, an increase of 145% of landlords volunteered to repay what they owe during the tax years of 2017/2018 to 2018/2019, highlighting the success of the campaign.
By 2020/2021 however, there was a sharp 42% decrease of 4330 disclosures made through the LPC. This resulted in only £17m of taxes recouped, half (£34m) from a year before. This was of course largely attributed to the halt in proceedings caused by the COVID-19 pandemic.
With an increase of HMRC enquiries into businesses and the sole-traders in 2021, the government have chosen to take the approach of pleading with unscrupulous landlords to come forward through the LPC. That way, the penalties issued wouldn’t be as harshly compared to if HMRC were to discover the non-disclosure of income or unpaid tax through an enquiry. HMRC regularly check and analyse the property market due to the rise of unfit landlords exploiting tenants and the taxpayer. This means there is and will be a concentrated focus in this area to redeem some of the huge amounts of borrowing attributed to the pandemic.
How To Apply For The Let Property Campaign (LPC)?
To take part in the Let Property Campaign you should:
- tell HMRC that you want to take part in the Let Property Campaign (Notify)
- tell HMRC about all income, gains, tax and duties you have not previously told them about (Disclose)
- make a formal offer
- pay what you owe
- help HMRC as much as you can if they ask you for more information
To benefit from the reduced penalties offered, HMRC will take account of the level to which you have helped them and the accuracy of the information you provided.
We hope this has outlined to you exactly what the Let Property Campaign (LPC) is and who it affects. If you require any further information on other government tax campaigns, or anything accounting related for that matter, please don’t hesitate to get in contact with us at Nordens where one of our trusted advisors would be happy talking you through your query.
