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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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