Buy to Let & Letting

WARNING: Landlords And Lettings Agents HMRC Are After You!

So, I’ve just opened a letter from HMRC and thought I’d share the contents.

As, I no longer own a letting agency this doesn’t affect me – but for any of you who do own a letting agency, your paperwork is about to get even more long-winded, and for those landlords out there who think they can collect rent and not pay tax – think again.

Landlords – Note the text in red.

Letting agents – note the extra paperwork involved.

“Dear Sir/ Madam,

I will soon be sending you a statutory notice under paragraph 18 of Schedule 23 to the Finance Act 2011 requiring you to send me a return of information.

I believe that your business may involve acting as a letting agent on behalf of property landlords.  I am writing to let you know that I will soon be sending you a notice under the above legislation.  That notice will require you to send me a return of gross rents that you have collected in the year ended 5 April 2014 on behalf of property landlords (including limited companies).

What information will I want from you?

We need to know about rents you have collected from tenants on behalf of landlords who have used your letting agency services in the year ended 5 April 2014.  We will use that information to check that the landlords declare the rents on their tax returns.  To request this information I will soon be sending you a statutory information notice.  This notice will require your return within 60 days of the date of the notice.  This is not a check of your tax affairs.  We will only use this information to check that landlords have declared their rental income correctly.

….In respect of each landlord you will need to give the following particulars in your return:

– the name and address of the landlord for whom the rents were collected;

– the total gross rent collected from the tenant for the landlord for the year ended 5 April 2014;

– the address of the let property to which the rent relates”

And HMRC have got every base covered – they want information for everything: Full Management; Lettings Only Services; Rents Collected and Landlords living outside of the UK.

Lettings agents will be required to send the return on a spreadsheet following “a specific format”.

And if you’re worried you may be breaching Data Protection, you’re not: “Under these circumstances the information becomes exempt from the non-disclosure requirements of the Data Protection Act 1998 under Section 35 (1) of that act”.

And letting agents – in case you’re wondering about the costs you’re going to incur?

“…any costs that you incur in providing your return are regarded as normal costs of complying with your legal obligations under tax law.  Unfortunately HMRC cannot reimburse businesses for such costs”.

You have been warned.

  1. Chris

    Thanks for this.
    I know of quite a few Landlords who do not declare their rental income. Some say they haven’t got round to it while others simply have no intentions of paying.
    I heard the last thing a person wants to have is HMRC coming after them because they leave no stone unturned.
    I like to sleep comfortably at night, so for the sake of saving some ££, I’d rather comply and pay my dues.

    1. Sam

      It makes me crazy that people don’t get round to it or have no intentions of paying – that’s what makes the rules so much harder for the rest of us who abide by them!

  2. Joe Doe

    Countrywide as usual have turned this into a money making exercise and charge landlords £18 for providing the “service” of reporting this to HMRC (as if it’s an obligation on the landlord).

    This is infuriating! As a software engineer I know I could write a tiny piece of SQL and a python program to spit out the Excel files in about 30mins.

    Anyway, called Countrywide today and made my case that it’s “normal costs of complying with your legal obligations under tax law” and that I’d never signed anything to agree to pay these charges and they have finally agreed to refund two years of charges. Hooray!

    1. Sam

      I love how you made your case – you are bang on! Personally, I think you should get your finger out and write that program pronto! I am sure there’ll be many agents who will be chomping at the bit to buy it!

    2. Phil

      Thank you Joe Doe – it infuriates me that Countrywide have done this to me and still not refunded – as usual they take it from the rent they pay me without asking or prior notice. It’s OUTRAGEOUS that they pass this cost on to us – it’s like me charging my tenant for doing my tax return.

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