A law firm has warned that the looming property portal will be a gold mine for tax investigators who are likely to focus on accidental landlords rather than rogue operators.

The new landlord database proposed by the Renters (Reform) Bill could expose those landlords who may - perhaps inadvertently - have incorrectly handled their tax affairs, according to Kingsley Napley.

This database could add to the already growing mass of information HMRC has in order to collect tax, believes partner Matt Spencer (pictured).

'It is as yet unclear the extent to which HMRC will have full access to this, but it is likely that it would be at least enough for nudge letters to be sent out to landlords to rectify their affairs, or for enquiries to be opened - depending on what other information they have already.'

Errors

The firm explains that this database would help identify errors split into two camps: the innocent mistakes, perhaps made by an accidental landlord who misses the CGT deadline on sale or makes a mistake offsetting their mortgage interest, and the deliberate mistakes made by a rogue landlord who has purposefully decided to underreport or underpay their taxes.

Spencer says the system is more likely to flush out a greater number of innocent mistakes because they are accidental and won't be artfully concealed. 

'This category of landlord doesn't spend their evenings and weekends studying the changes in the laws around the rental sector and can't afford to keep top-notch lawyers and accountants on a retainer,' adds Spencer.

'Unfortunately, some tax issues are more complicated for the accidental landlord, who might, for example, have to contend with partial private residence relief on a sale and a need to split decades of invoices into 'capital' and 'repair'.'

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