HMRC – Property Income Campaign
In February 2008, HMRC began investigating discrepancies into taxpayers records with regard to property income.
Information from land registry and letting agents may be matched to previous tax returns in order to follow up potential misdeclarations of rental income.
Another potential point for investigation may be the overstatement of mortgage interest. Only the interest element of any mortgage payments is an allowable expense to offset against any rental income, it is not always the total mortgage payments.
HMRC have stated they plan to write to an initial group of 500 taxpayers regarding the campaign. If you do not respond to the queries you may become subject to a more formal investigation. This group may be extended depending on the results and feedback from the initial investigations.