HMRC is responsible for the money laundering supervision of certain businesses including letting agencies. Businesses that HMRC is responsible for supervising should be aware of the requirement to register with HMRC and the penalties for failing to register. It is a criminal offence to trade as a letting agency business (as defined within the Regulations) without being registered for money laundering supervision.

You may need to register with HMRC if your business operates as a letting agency business.

A letting agency business means a firm or sole practitioner whose work consists of things done in response to instructions received from a:

• prospective landlord seeking to find another person to let land to,
• prospective tenant seeking to find land to rent.

This is for a term of a month or more and over €10,000 per month. This covers both residential and commercial property lettings.

A lettings agent carrying out lettings activity not defined within the Regulations, for example, below €10,000 per month, is not required to register.

There are penalties for not registering in a timely manner. If you think you should have been registered or need further clarification, we would be happy to help.

Taxpayers may find themselves in a position where they need to make a complaint about HMRC’s service. Complaints can relate to many different issues such as unreasonable delays, mistakes and poor treatment by HMRC’s staff. Note, there is a separate procedure to be followed by taxpayers that disagree with a decision of HMRC or that wish to complain about serious misconduct by HMRC staff.

Taxpayers that wish to make a complaint should in the first instance write or speak to the person or office they have been dealing with. If the complaint is not resolved or the taxpayer would prefer not to discuss the issue with the person or office they have been dealing with, then a complaint can be made using an online complaint form. A complaint can also be made by phone or post.

If the response is unsatisfactory a further request can be made for the complaint to be looked at again by a different complaints handler who will take a second look at the complaint and then provide a final response. Taxpayers that are still unhappy with the response can ask the Adjudicator to look into the complaint. If they are unhappy with the Adjudicator’s decision it is possible to contact their local MP to ask for the matter to be referred to the Parliamentary and Health Service Ombudsman.

HMRC publishes a list of income streams that are excluded from a UK property business. The list includes fishing concerns, hotels and guest houses, tied premises, caravan sites, lodgers and tenants in their own home, extra services to tenants and letting surplus trade accommodation. In most cases the income from these activities will be taxed as income of a trade and not as property income.

In addition, there are certain receipts that can arise out of the use of land, and which are specifically excluded by statute from a rental business. These include yearly interest, income from the occupation of woodlands managed on a commercial basis, income from mines and quarries and income from farming and market gardening.

There is also a £1,000 property income allowance that applies to income from property (including foreign property). If a taxpayer’s annual gross property income is £1,000 or less the amount is exempt from tax and does not need to be reported on a tax return.

There are special rules for the taxation of post-cessation transactions after a trade has ceased. The legislation clearly states that the person who receives or is entitled to the post-cessation receipt is the person who is subject to Income Tax or Corporation Tax on the income. This does not have to be the same person who carried on the original trade.

HMRC manuals are clear that a receipt, which arises from a property rental business after it has ceased, is taxable under special rules; provided, of course, the taxpayer has not already included that receipt in the computation of their rental business profits. The tax payer may also be able to claim relief for post-cessation expenses for which they have had no relief. One example might be the cost of background heating for empty premises to keep down condensation and so maintain the value of the property for later sale.

A claim for post-cessation property relief is possible if a customer ceases to carry on a UK property business and within 7 years makes a ‘qualifying payment’ or a ‘qualifying event’ occurs in relation to a debt of the business.

A claim to relief must be made on or before the first anniversary of the 31 January following the end of the tax year in which the payment is made.

If you are a couple that is getting separated or divorced, apart from the emotional stress, there are also tax issues that can have significant implications. Whilst this is unlikely to be uppermost in your mind it is important that the tax consequences of the break-up are carefully considered.

Whilst Income Tax does not automatically cause an issue for separating couples as it is an individually assessed tax, there are other taxes that need to be considered. For example, when a couple are together there is no Capital Gains Tax (CGT) payable on assets gifted or sold to your spouse or civil partner. However, if a couple separate and do not live together for an entire tax year or get divorced then CGT may be payable on assets transferred between ex-partners.

This means that the optimum time for a couple to separate would technically be at the start of the tax year so that they would have up to a year to plan how to split their assets most tax efficiently. Obviously, in the real world most couples will have far more on their minds than deciding to get separated on a certain day, but these issues should be kept in mind.

It is also important to make a financial agreement accepted by both parties. If no agreement can be reached, then applying to the court to make a 'financial order' will usually be required. The couple and their advisers should also give proper thought to what will happen to the family home, any family businesses as well as Inheritance Tax implications.