7:30 AM, 9th October 2024, About 2 hours ago
Text Size
Thousands of landlords across the UK are now wondering if HMRC, the government’s tax authority, is going too far in its latest crackdown. For years, landlords have used perfectly legal ways to manage their taxes and property businesses, but HMRC is suddenly treating these methods as if they are wrong. Is HMRC overstepping its limits?
This article explains what’s really going on, using simple language to break down how HMRC is targeting two strategies used by landlords: Substantial Incorporation Structure (SIS) and Capital Account Restructure (CAR). These methods aren’t some sneaky tax dodges. They’re legitimate tools that help landlords move their property businesses into limited companies without all the usual hassle. But now, HMRC is treating them like tax avoidance schemes.
Being a landlord can be tricky, especially when dealing with banks, mortgages, and rising interest rates, many landlords have decided to move their property businesses into limited companies because it can help them plan better for the future.
However, moving your properties into a company isn’t easy. Most banks don’t like it when you try to switch your mortgage from your name to a company’s name. They often refuse, or charge big fees. This is where SIS and CAR come in. These are legal ways to move your properties into a company without all the extra costs and headaches. For years, landlords have been doing this, and HMRC hasn’t had a problem with it—until now.
Neither SIS nor CAR change the tax outcomes of moving your business into a company, nor were they designed to. They simply help landlords overcome practical issues like refinancing and mortgage transfers, making the process smoother.
Lately, HMRC has started acting as if SIS and CAR are sneaky tricks to avoid tax. They’ve even sent out warnings, called Scheme Reference Numbers (SRNs), to landlords using these methods. This suggests HMRC suddenly sees them as suspicious, even though they’ve been accepted for years.
What’s strange is that SIS and CAR have passed HMRC’s checks before, with many landlords being told they owed no extra tax. So why the sudden change of heart?
Some people think this change might be due to criticism from public figures, like Dan Neidle, who wrongly called SIS and CAR tax avoidance. It seems HMRC may have been influenced by this media attention, instead of sticking to the facts.
The short answer is no. SIS and CAR aren’t about dodging tax. They’re about helping landlords manage their businesses better, especially when dealing with tricky banks or high mortgage fees. Moving your properties into a company (a limited company) is a legal right that landlords have.
For a long time, the law has allowed landlords to move their properties into companies to get some tax benefits and more flexibility. The process is called incorporation and there are reliefs available for eligible businesses to ensure the process doesn’t trigger unfair taxation. Courts have even ruled that this is perfectly fine. This isn’t about avoiding tax—it’s about running your business the right way.
If HMRC keeps going, landlords might be scared to even consider incorporation—even though it’s their legal right. The bigger problem is that if HMRC can suddenly change its mind about these methods, what else might they decide to target? This could leave landlords and business owners feeling unsure about what’s allowed, which isn’t good for anyone.
If HMRC doesn’t back down, it could also set a bad example, making other businesses feel like they’re being unfairly punished for doing nothing wrong.
If you’re a landlord or business owner and you’re feeling the heat from HMRC’s crackdown, remember this: you have rights. HMRC cannot suddenly decide to rewrite the rules. You’re allowed to manage your property business in a smart, legal way, and you shouldn’t be treated like a criminal for doing so.
If you think HMRC is overreaching and want to help us stand up for landlords, please consider supporting the Property118 Action Group. With your help, we can push back against these unfair actions and defend the rights of landlords everywhere.
Visit our JustGiving page to donate. Every contribution helps us fight back and hold HMRC accountable. Together, we can make a real difference.
Linked discussion below: –
Rebuttal: Dan Neidle’s Misunderstanding of Property118 incorporation models
Previous Article
Generation Rent want two months' rent compensation for tenants!
