Around
a third of buy-to-let landlords could be dodging their tax on their rental
income at a cost of £550m to the taxpayer, new figures reveal.
Some 1m
private landlords have failed to declare any revenue in the past tax year, in
contrast to the 1.9m that did, investigative news agency Exaro reports.
Those evading
tax could face a crackdown from HMRC in 2013, following an announcement from
the tax authority late last year that it was launching a special taskforce to
target private landlords, initially in the south-east, to include those that
are letting properties out and not disclosing the income on their tax returns.
HMRC estimates
the evaded amount to be around £550m a year.
Richard
Murphy, head of Tax Research LLP, said the issue was a ‘massive sideline
industry’ that HMRC should tackle as it ‘would pay for a quarter of their
staff’.
‘One way round
it is to require everyone to fill in a tax return,’ said the ex-KPMG
accountant. ‘Is that unreasonable? Not in my opinion. It’s obligatory in most
European countries.’
Murphy also
suggested another way to unearth tax cheats is to compel people who rent their
property to name their landlord or letting agent when they fill in their annual
Council Tax rates assessment.
But he
stressed the most effective way to increase the compliance rate is when ‘people
believe they will be caught’.
An HMRC
spokesman said: ‘Nearly a billion pounds has been made available to us to
tackle tax dodging and we expect this work to bring in an extra £22bn by
2014/15. Some of this will come from the minority of landlords who are
currently dodging their tax.’
