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Landlords urged to get taxes in order before database comes out

The proposed landlord database will be ‘gold mine’ of information for tax investigators – meaning investors need to make sure their financial affairs are up to date before it arrives.

That’s according to Dawn Register, head of tax dispute resolution at accountancy firm BDO.

The Renters’ Reform Bill does not clearly set out that HMRC will get full access to all information submitted as part of the registration process, unlike for the equivalent provisions for the Register of Overseas Entities.

However, BDO said it is reasonable to assume that the tax authority will make use of the publicly accessible data for compliance activities.

Dawn Register, head of tax dispute resolution at BDO, said: “HMRC already holds significant information on taxpayers’ financial affairs. The introduction of a new private rented sector database will leave few places to hide for landlords who don’t comply.

“Any landlords who don’t currently pay the right amount of tax would be well advised to bring their UK tax affairs up to date before the register is introduced.

“In addition to providing peace of mind, making an unprompted disclosure should lead to lower tax-geared penalties for errors, compared to rectifying mistakes after HMRC gets in contact. It will also help to mitigate late payment interest – which is currently at a 14-year high of 6.75% per annum and due to rise to 7% from 31 May.”

The HMRC has encouraged those who have made mistakes to voluntarily correct their position by using the Let Property Campaign, part of HMRC’s Digital Disclosure Service, or other disclosure processes.

Further property data will also become available after the Land Registry implements the new information requirements in the Levelling-up and Regeneration Bill, which are also aimed at extending transparency of property ownership and transactions.

HMRC will combine any new data from the landlord database with that which it can already access such as the Land Registry’s records, the Register of Overseas Entities owning UK property and the data within HMRC’s own Connect database, which reportedly holds over 55 billion pieces of data.

Data analysis should help HMRC identify cases for investigation, with a view to charging tax, late payment interest and tax-geared penalties.