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Flood Insurance Plan Leaves Rental Properties Unprotected

Flood Insurance Plan Leaves Rental Properties Unprotected

New Flood Insurance Plan Leaves Private Rental Sector Properties Unprotected

The ill timed Government announcement over the changes to flood insurance does little to reassure property owners and landlords about flood insurance price rises as huge swathes of the country remain flooded after the winter storms.

The Government has finally reached a deal with the Association of British Insurers (ABI) to replace the ‘Statement of Principles’ agreement of the Water Bill, that was originally due to expire on 31st July 2013, under which insurers offered affordable flood insurance coverage to a majority of households in return for the Government maintaining spending on UK flood defences.

The British Property Federation (BPF) reported that an alliance of property industry leaders and the Council of Mortgage Lenders (CML) had huge concerns about the new plan, called Flood Re.

A number of organisations have already called for urgent amendments to the Water Bill, after it emerged that a significant number of properties that had been expected to be included within Flood Re, would instead be excluded.

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Buy to let landlords who own rental properties in the North East, Yorkshire, East Anglia and London, should be aware that they will be among businesses targeted by six new HM Revenue & Customs (HMRC) taskforces.

The Association of Residential Letting Agents (ARLA) report that HMRC are likely to focus on private rented sector (PRS) landlords providing temporary accommodation and landlords of Houses of Multiple Occupation (HMO’s) although specific details on the scope of the taskforce have yet to be announced.

It is expected that the taskforce will initially focus on private sector landlords in specific areas, but if the taskforces are successful, their remit could be easily extended to cover the whole of the UK.

In 2011/12, HMRC launched 12 taskforces with up to 30 more set to follow in 2012/13.

The taskforces are a result of the Government’s £917m spending review investment to tackle tax evasion, avoidance and fraud which aims to raise an additional £7bn each year by 2014/15

HMRC are using specialist teams and sophisticated techniques to gather information from across Government departments, and other sources including press and internet advertisements, universities and colleges, to identify individuals who are not paying sufficient tax and the chances of going undetected are increasingly remote.

It is not just unpaid income tax that HMRC are investigating, landlords providing temporary accommodation, perhaps to seasonal agricultural labourers, students or even homeless people, may find that a sizeable VAT liability is incurred.

Some landlords may not realise that VAT is chargeable on temporary accommodation as HMRC tend to treat it in the same way as hotel or guest house accommodation.

Landlords may not be registered for VAT when they should be and so could face a back-dated VAT claim.

The HMRC taskforces undertake intensive bursts of activity in specific high risk trade sectors and locations in the UK.

Exchequer Secretary, David Gauke, said: “HMRC is on target to collect more than £50 Million (GBP) as a result of the taskforces launched in 2011/12. We have made it clear that we will not tolerate tax evasion. Everyone needs to pay the taxes they owe in full. We are determined to crack down on the minority who choose to break the rules. It is not fair that at a time when most hard-working people are paying the right tax, others are trying to get out of paying what they should.”

HMRC’s Director of General Enforcement and Compliance, Mike Eland, said: “These six new taskforces will bring together specialists from across HMRC to tackle tax dodgers. If you have paid all your taxes you have nothing to worry about. But deliberately evading tax you should be paying can land you with not only a heavy fine but possibly a criminal prosecution as well”.

Her Majesties Customs & Revenue (HMRC) is set to expand spot-checks to include landlords and small business owners across the UK in 2012.

UK Landlords and small business owners need to be prepared for an unwelcome knock on the door and a potential investigation into their business activities, by the TAXMAN!

HMRC is planning to investigate thousands more landlords and small businesses in 2012, and is expanding its investigations on several fronts.

The Business Records Check regime, trialled in selected areas of the UK in 2011 will expand its remit to the whole of the UK.

HMRC initially aimed to target 50,000 UK small businesses but have since lowered their expectations to target around 20,000 small businesses and landlords in 2012.

HMRC planned to take on around 90 extra staff in order to help it conduct its investigations, suggesting that it considers the checks to be an important priority.

The purpose of the unannounced visits is to ensure that businesses have kept sufficient records, and that those records back up their tax returns, and that could mean potential trouble for a large number of small enterprises.

Landlords and small business owners that are found to have kept insufficient or inaccurate records could be fined – heavily!

UK landlords have often mused over their immunity to such investigations, until the end of 2011, when the Revenue announced the establishment of a new task force specifically charged with investigating landlords in the North East of England and North Wales, and these investigations will now be extended across the country as part of the Revenue’s continued drive to clamp down on tax evasion, leaving UK landlords with no doubt over their position.

UK landlords are legally obliged to keep comprehensive records detailing rental income and related expenditure. Landlords must keep these for at least six years following the end of the tax year to which they relate. Accurate record-keeping is the most important way in which landlords can protect themselves.

UK landlords should ensure the accuracy of their tax returns. HMRC has dished out fines for relatively minor infractions, and it is therefore important that a landlords tax return is fully supported by detailed records.

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