Less than 500,000 people have indicated HMRC that they own properties beyond their home. However, other sources show that more than 1.2 million people in Britain own more than one property. People are not declaring their properties, to avoid paying property income tax and gains tax.
Phase 1: Campaign
HMRC has launched a lot of campaigns to warn the owners to declare their property values, rent and gains made out of it. The campaign phase is completed. Now, HMRC is at the brim of action. How will HMRC track the non-payers?
Phase 2: Track down
HMRC has a number of tools to track down the non payers.
a) With the help of declared income and asset data of people, it will identify the population that is likely to own properties, other than their house.
b) With this data, the HMRC will cross check the land registry data, data from banks on loans and mortgage, to find the suspect individuals.
The most common reason for not declaring the properties is that these landlords are not making a lot of profits, according to Lawrenson of Lettingfocus.com. The high rate mortgage may sometimes lead to zero profit after expense and they eventually do not file a return. He also says that it is essential to inform HMRC, you make a profit or loss or even if you break even.