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Unlike many historic HMRC campaigns, the Let Property Campaign (LPC) has not got a date by which HMRC will close it so it is no longer available.
The LPC is a way for anyone who has income from letting out a residential property to put their tax affairs in order.
To participate in the Let Property Campaign an individual must have rental income to declare to HMRC. Most people do not notify HMRC of the fact that they have rental income as often by the time the costs and mortgage have been deducted from the rental income there is little if any profit and before the dramatic fall in interest rates in 2008 this was generally the case. People are not aware that regardless of whether they make a profit or not then rental income needs to be declared to HMRC and the person should have registered for self-assessment and declared the profit (or loss) on their tax return.
The LPC is not just about putting an individual's tax affairs right relating to the rental income. There must be rental income to take part in the Let Property Campaign but the campaign must also declare any other undisclosed income. Thus if someone who is self-employed has also not declared all of their income from self-employment they should use the LPC to regularise all of their tax affairs.
The process is that HMRC are notified (by either the individual or their advisor) that the individual wishes to take part in the LPC and HMRC write to them with a reference number and allow the individual 3 months to complete the disclosure. This is called an unprompted disclosure in that the individual volunteers to HMRC that they wish to declare rental income.
Periodically HMRC also obtain information regarding housing benefit or from letting agents (HMRC have the legal power to force local authorities or letting agents to provide this information) and HMRC will write to the individual to whom the rent is paid and invite them to take part in the LPC. This is called a prompted disclosure and has a higher penalty than unprompted disclosures.
For instances where there are reasonable records and only one property then the 3 month suggested deadline is reasonable where an experienced tax advisor is doing the calculation and the profit and loss account. For more complex cases, although HMRC suggest the 3 months, if it is going to take longer to complete the LPC forms then we have found that clear communication will result in the agreement of extended time to deal with the LPC.
When the form is received by HMRC they are entitled to ask questions but having undertaken hundreds of these types of disclosures we have found that providing good information is provided to HMRC with the LPC form then they generally get accepted.
HMRC are only interested in receiving the LPC disclosure form if there is tax due. In some cases there will be losses and we always send HMRC a copy of the profit and loss account showing the losses and confirm that they will be taken to the self-assessment tax return to set against future profits.
Although HMRC should automatically register someone for self-assessment when they register to take part in the Let Property Campaign we have found that HMRC fail to do this and for anyone taking part in the LPC we would recommend that they register for self-assessment at about the same time as they notify HMRC they are participating in the LPC.
HMRC claim that the LPC gives an individual a more favourable penalty position than if they made a disclosure by other routes. Although we do not necessarily agree with this statement it is the only route for people who have undeclared rental income only.
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Our firm of tax advisors specialise in resolving people's problems with HMRC. We have extensive expertise in dealing with all forms of tax investigations and tax disputes as well as with taking matters to the Tax Tribunal where agreement cannot be reached.
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