The accountancy group also found that London commuter towns make up eight of the top ten nationally.
The firm reported that Ilford had the highest number of landlords per capita in the country who had admitted that they had underpaid the tax on their property income in the last year. This figure was 14.3 landlords admitting the underpayment per 100,000 people.
In second place was Slough, with 12.6 landlords admitting they had underpaid tax per 100,000, followed by Dartford with 12.1 landlords, Luton with 11.6, and Enfield with 11.3.
The disclosures of tax avoidance by buy-to-let landlords were made under HMRC’s Let Property Campaign. The campaign proactively mailshots buy-to-let landlords suspected of avoiding tax on their rental income warning them of the consequences of tax avoidance. The individual then has 90 days to calculate how much is owed to HMRC or risk an investigation.
HMRC has reported that the campaign had been hugely successful in encouraging landlords to come forward in order to avoid a ‘full-blown tax investigation’.
The total amount of additional tax collected by HMRC through the campaign amounted to £17.7m in the last year.
Neela Chauhan, partner at UHY Hacker Young, says: ‘HMRC sees rich pickings in the buy-to-let market in terms of unpaid tax. The amounts collected from landlords who have voluntarily come forward suggest they may be right in their assessment.’
‘Landlords leave themselves vulnerable to prosecution and even a prison sentence if they fail to declare the correct amount of rental income or pay CGT on the sale of buy-to-let properties.’
‘Given the consequences of laying low, proactively admitting a possible error to HMRC is unquestionably the prudent course of action.’
HMRC’s Connect AI system detects targets for the Let Property Campaign by automatically cross-referencing data from sources including council tax bills, the Land Registry, and even Rightmove and Zoopla listings.
UHY Hacker Young states that buy-to-let is seen as a ‘relatively accessible investment for individuals’ as there are almost 2.7m private landlords in the UK according to HMRC data.
According to a study carried out by Market Financial Solutions (MFS) at the end of September 2021, more than two-thirds, 68%, of investors thought that buy-to-let is an attractive investment option.
The firm warns though that because many of these landlords are not professional investors, they may fail to seek professional tax advice and have a high chance of making mistakes or omissions in their tax returns.
