HMRC enquiries for landlords and property owners: rental income, CGT and SDLT

It is HMRC's long-running route for individual landlords of residential property to come forward and put right unpaid tax on rental income. You notify HMRC first, then have 90 days to make the disclosure and pay. Coming forward before HMRC contacts you, with no reason to think it is about to, counts as an unprompted disclosure and usually leads to lower penalties than being found. We prepare the disclosure and negotiate the outcome.

Do not ignore it, and do not file a partial return and hope. Gather rental records, such as tenancy agreements, bank statements and agent statements, and take advice before contacting HMRC. A properly prepared voluntary disclosure normally leads to a lower penalty than if HMRC finds the income first. We calculate the tax and prepare the disclosure.

HMRC receives data from letting agents, deposit protection schemes, the Land Registry, banks, overseas tax authorities and mortgage records, and runs campaigns that send letters to people it thinks may have undeclared income. A letter can be a nudge, a compliance check or a formal enquiry, and they need different responses. Do not assume a letter is only a reminder.

First, note the date and the deadline. Then work out what kind of letter it is: a nudge asking you to check your position, a compliance check, or a formal enquiry notice into a tax return. Do not reply from memory. Send us the letter and we will review your records, assess the exposure and handle the response.

The usual limit is four years from the end of the tax year, extended to six years where the underpayment was careless and to twenty years where it was deliberate or you failed to tell HMRC you needed to file a return. The longer periods can reach rental income from long before. Disclosure should cover all the years that may be at risk.

Penalties depend on behaviour: careless, deliberate, or deliberate and concealed, with a higher maximum for each. They are a percentage of the extra tax, reduced for disclosure that is early, full and cooperative. The reduction is bigger for unprompted disclosures. Interest runs on top. Failure to notify chargeability and late filing penalties may also apply.

HMRC charges a late filing penalty and interest on any late payment, and the amount grows with time. If HMRC finds the sale from Land Registry data before you come forward, penalties can be higher. You should file the return and pay now, and where appropriate send a short explanation. We help you prepare the return and manage any penalty appeal.

Ask what basis HMRC uses. Common issues are the wrong base cost or missing improvement evidence, private residence relief claimed for periods that HMRC disputes, and market value being used where the sale was not at arm's length. We review the computation, gather valuation and cost evidence and negotiate the correct figure.

Yes. HMRC may ask for evidence that the property was your main home for the periods claimed: council tax, bank statements, utility bills, electoral roll entries and your nomination of the main residence if you had two homes. If you let the property while away, the deemed occupation rules and lettings relief limits are common problem areas.

Yes. HMRC has nine months from the filing date to open a formal enquiry into an SDLT return, and can raise a discovery assessment later if tax has been underpaid, with longer limits for careless or deliberate errors. Common issues include reliefs claimed on company purchases, the higher rates surcharge, partnership transfers and mixed-use treatment.

HMRC may challenge a relief claimed, for example that the company was a property rental business, or that it kept to the conditions for three years afterwards. We look at the evidence on the use of the property and the company's activities, and respond. If the relief truly does not apply, we discuss settlement of the extra SDLT, interest and penalty.

Spouses are taxed 50:50 on jointly held property income unless they hold unequal beneficial interests and make a valid declaration on Form 17, which must reach HMRC within 60 days and applies only from the declaration date. If the split on returns was wrong, tax may be underpaid by one spouse. We assess and correct the position.

Usually yes. Voluntarily correcting an error before HMRC finds it generally leads to a lower penalty than waiting to be found. However, how you disclose matters, and a hasty or incomplete disclosure can create more problems. Take advice first, quantify the position, and then decide how and when to approach HMRC.

You are not legally required to, but HMRC enquiries are technical, and what you say can be used. A representative who understands property tax can set the scope, control the information given and negotiate the penalty. Your existing accountant can stay involved, and we can work with them or take over the correspondence.

The furnished holiday lettings regime ended in April 2025, so enquiries about earlier years apply the old rules to those years and the new rules afterwards. HMRC may query whether lettings met the occupancy conditions, claims for capital allowances or gains reliefs such as business asset disposal relief on a sale. Transitional rules and anti-forestalling rules apply, so records matter.

In serious cases HMRC may use its civil fraud procedure under Code of Practice 9, which offers a chance to make a full disclosure in return for no criminal investigation. It is a significant step and you should not respond without advice. If you get a Code of Practice 9 letter, contact us immediately.