Navigating Taxation as a Landlord: The Imperative Need for Professional Advice
Recent months have seen a surge in the spotlight on property planning schemes, notably Property 118, who have allowed landlords to benefit from the tax advantages of property incorporation and Less Tax 4 Landlords which has seen an HMRC spotlight highlight significant issues with the structures they have put in place for clients.
However, the landscape is evolving, and what once seemed like a sensible opportunity to mitigate tax is now facing challenges and scrutiny from HMRC. Landlords who have taken advantage of such schemes are finding themselves in uncertain terrain, prompting a crucial realization: the necessity of seeking expert advice from tax professionals.
The allure of reduced tax liabilities and increased profitability has undoubtedly been a driving force behind many landlords’ decisions to engage with providers like Property 118 and Less Tax 4 Landlords. These initiatives provided a means to lower tax bills by restructuring your business to allow for the offsetting of mortgage interest against rental income, a strategy that had been widely promoted across the real estate investment landscape. Less Tax 4 Landlords have gone further, promising IHT exemptions and freedom from mortgage interest relief restrictions without incorporation.
Amidst this evolving tax scenario, landlords who have utilized schemes like Property 118 are finding themselves in precarious positions. What once seemed like a prudent financial move is now potentially subject to legal challenges and increased tax liabilities. The complexity of tax laws, coupled with the evolving regulatory environment, demands a nuanced understanding that extends beyond the purview of most landlords. That’s not to say their planning doesn’t work, but we’ve heard stories of incorrect advice, documentation and huge fees.
Individuals who used Less Tax 4 Landlords are in an even less appetising position, having a specific HMRC spotlight (Property business arrangements involving hybrid partnerships (Spotlight 63) – GOV.UK (www.gov.uk)) for a scheme we reviewed several years ago and discovered huge flaws in what was being promised by the team.
Unlike Property 118 and Less Tax 4 Landlords, we are led by a qualified tax specialist with a legal background (LLB/CTA/TEP) who is able to review transactions which have been undertaken historically with a view to giving you a clear, fair and professional opinion on your circumstances.
Furthermore, engaging with tax experts can also offer a shield against potential legal challenges arising from the use of these schemes and we have access to specialist lawyers who can assist with protecting your position and possibly making a claim against the providers.
Get in contract with us if you are concerned about the situation you may be in. We’re always happy to provide an initial consultation free of charge. Unfortunately if you are caught up in the LT4L structure we are likely to recommend a full disclosure to HMRC of the circumstances with a view to tidying your circumstances as far as possible.
Contact us on info@fusionpartners.co.uk to book an initial consultation.