Tax crackdown on holiday homes

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by Kay Murchie

Approximately 300,000 Britons have a property abroad, primarily Spain and France. The majority rent out the property during high season to cover costs but are unaware that this income should be declared to the taxman.

Many could be prosecuted, face penalty charges or may have to pay up to double what they owe.

HM Revenue and Customs (HMRC) state that they have information on 400,000 people who owe approximately £2 billion in tax. This is part of a broader attack on people who have not paid any UK tax due on interest they have earned on their savings deposited in banks, including those in the Isle of Man and
the Channel Islands.

Many believe that the taxman won’t find out as the deals occur abroad. HMRC say they have details of customers with unpaid tax overseas. Some are unaware that they have to pay tax, while some avoid paying it intentionally.

HMRC are allowing people 16 days to examine their accounts to see if they owe tax. If you inform HMRC of the income on which you owe tax, the penalty will be less severe. Once you have informed the taxman what you owe, you have until the end of November to calculate the figures and pay the amount due, along with the fine.

However, those who fail to admit to owing tax, HMRC will launch a full-scale investigation and those that are found face harsher penalties and, in some cases, prosecution.