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Call for evidence to simplify tax reporting for landlords

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  • 28/08/2019
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Call for evidence to simplify tax reporting for landlords
The Office of Tax Simplification (OTS) has called on landlords and the self-employed to complete a survey as part of its project on simplifying tax reporting and payment arrangements.

 

In July, OTS published a report setting out the scope of its project, which set out to look at how tax reporting and payments could be made easier.  

The department has also published two papers this year; one in January which looked at how the advancement of technology and software had affected the way people understood tax payments and another in July which looked at how people used online platforms for employment and the possibility of introducing an online PAYE system. 

The government body now wants self-employed people and landlords of residential property to share their experience and views on the current system and potential areas of improvement. 

The surveys will remain open until 20 September and a report will be published in the Autumn. This will then potentially be followed by a more extensive review into the system. 

Bill Dodwell, tax director of the OTS, said: “What we’re doing with this study is see if we can identify new ways to help people with their tax reporting. Landlords fall into the category of people who need some help, as there’s enough evidence that there isn’t sufficient compliance. It’s really bad news if somebody doesn’t fit into the tax system because they don’t understand it or know what to do, they don’t know how to register or what records to keep. 

“There’s a sense that people in this sector don’t know what to do that’s why we’ve added it on to our review.” 

Evasion caused by lack of knowledge

Recent research from accountancy firm UHY Hacker Young showed that the number of UK buy-to-let landlords admitting to not paying tax on their rental income rose 145 per cent over the past year, increasing to 16,110 in 2018/19 from 6,600 in 2017/18, however, Dodwell said he felt this not always intentional, but probably due to a lack of knowledge. 

“When people start looking for help, they struggle to find things and what they do find they find confusing and written in jargon, not best adapted to somebody who hasn’t studied tax or business,” he added. 

Limited company trend

As for the increasing number of buy-to-let landlords using limited companies as a vehicle to purchase property, Dodwell said: “We’ve found that people can end up with more complicated structures than they need – sometimes they end up with a company when just being self-employed or an owner might be better and save them time and money.” 

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