UK Government Strengthens Tax Non-Compliance Measures

Tax compliance in the UK property sector is under renewed scrutiny. In a March report, the government outlined new measures aimed at tackling unreported income and tax evasion.

With nearly £40 billion potentially lost each year, the government is stepping up efforts to bring greater fairness and accountability to the housing market.

The proposed changes could mean new reporting requirements and increased scrutiny for landlords, letting agents, and property professionals. Here’s what you need to know.

The Push for Stronger Oversight & A Fairer System

The UK government has set its sights on tackling the persistent issue of tax non-compliance in the property sector.

Billions in revenue potentially go uncollected each year due to under-reporting and unregistered lettings, and the Treasury is under pressure to close the gap. This isn’t just about recovering lost funds, though; it’s also about fairness. Honest landlords and agents shouldn’t be undercut by those who look for loopholes.

This initiative is part of the government’s broader effort to modernise tax collection across all sectors. With more property transactions moving online, new proposals aim to improve oversight, data accuracy, and transparency in reporting and taxing property income.

What Are The Proposed Changes?

Under these plans in the ‘Enhancing HMRC’s Powers: Tackling Tax Advisers Facilitating Non-Compliance’ document, HMRC would gain stronger powers to access data from digital platforms, including property portals, letting platforms, and agent management systems.

Some of the proposed ideas include:

• Enhanced powers that allow HMRC to investigate tax advisers suspected of contributing to inaccuracies in clients’ tax documents.
• Mandatory HMRC registration for tax advisers acting by way of business, in the UK or overseas.
• Increased penalties where advisers fail to cooperate or provide false information. The current fine is £50,000, but the UK Government is concerned this isn’t an effective deterrent.
• Public disclosure of HMRC’s actions against non-compliant tax advisers.
• Exclusion of charities and volunteers, though feedback is invited on broadening this.

The goal is to create a clearer picture of rental income being generated and to identify discrepancies between declared income and actual activity.

This push also aligns with global standards, where similar data-sharing models are already in place. Through this, HMRC hopes to better identify unregistered landlords or undeclared earnings and ensure everyone follows the same rules.

The Role of Letting Agents and Property Platforms

For letting agents and online platforms, the spotlight is growing.

Agencies like Allen Goldstein may be required to report more data to HMRC, which means a greater need for accurate, transparent record-keeping. It’s crucial for us (and for our clients) to stay ahead of regulatory shifts, ensuring we operate fully within the law while keeping processes smooth and stress-free.

Read more about the impacts of non-compliance for letting agents here.

How Landlords Can Stay Compliant

Now more than ever, landlords must keep their financial records in order by declaring all rental income, maintaining clear documentation, and working with trusted agents who understand compliance.

Staying informed with the latest regulations and seeking professional advice is essential to avoid costly mistakes.

Worryingly, some landlords are being wrongly advised to route rent into accounts not clearly linked to them to reduce tax. This breaches legal obligations and puts letting agents at risk of HMRC fines of up to £3,000 if ownership of the account can’t be proven.

Agents who follow the rules can be unfairly undercut by those who don’t. Stronger powers for HMRC to hold tax advisers accountable will help protect compliant professionals and level the playing field across the sector.

Working With The Experts

At Allen Goldstein, we see transparency and the push for a fairer system as win-win. It builds trust, supports ethical landlords, and strengthens the housing market overall.

If you have questions or need guidance on staying compliant, our team is here to help.

Get in touch online today.

Or send an email to enquiries@allengoldstein.com or call 020 7183 4101