Landlords face a new regulation threat as anyone letting a property with a local authority licence may have to prove they file tax returns before moving in a tenant.
HM Revenue and Customs (HMRC) is moving forward with efforts to tackle the black economy with a new compliance tool called ‘conditionality’.
The idea is any landlord who must apply for a house in multiple occupation licence or register with a landlord licensing scheme must show they are also tax registered with HMRC before the licence is granted.
“Tax registration could be made a condition of access to licences such as those issued by local authorities for private hire vehicles, trading, scrap metal, environmental health, planning, or property lettings,” said the consultation document.
“Conditionality could be applied to some of these licences in a targeted way, allowing HMRC to prioritise those sectors or areas of business which are affected by the hidden economy.
“It could also help HMRC to focus upon sectors where we know, for example, that there is a lot of self-employment or subcontracting which would lead to a large amount of self-reporting for tax purposes.”
HMRC has released details of the consultation responses.
The concern is policing compliance would be a burden to local authorities and businesses, but the general feeling is new ways are needed to tackle tax avoidance, which HMRC estimates costs the Treasury around £6 billion a year in lost revenue.
HMRC has announced that the next step is developing a conditionality strategy and trying out the new rules with a pilot scheme.
“By tackling the hidden economy we can help to shrink the space for wider criminality and non-compliance to flourish. This reduces opportunities for businesses to profit from illegal workers and criminal activity, and so delivers wider benefits for society,” says HMRC.