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Tuesday, August 12, 2008

More regulation for buy-to-let!?

Landlords may recall my recent review and rant about the creeping regulation affecting us all in the buy-to-let world

Well there appears to be more....

Where do professional landlords go for their landlord insurance?

According to construction journal
landlords could be hit by a planned clampdown by the taxman on buy-to-let investors.

Thankfully, this will not impact on the majority of landlords who buy the odd investment property just to let out. However, it could well effect serial developer landlords who acquire property to do up before then renting them out.

This is because a scheme run by HM Revenue and Customs called the Construction Industry Scheme (CIS) may also apply to developer landlords.

HMRC to clarify position of developer landlords

Contract Journal reports that HM Revenue and Customs officials are considering plans to impose the CIS construction tax scheme on more buy-to-letters.

The move would mean anyone buying a flat to rent could have to register for CIS if they carry out any improvement work on the property.

Revenue officials have held a series of meetings with accountancy experts as they bid to draw up clearer guidance on rules for buy-to-let investors.

One source close to the talks said: "Everything hinges on the Revenue's definition of a property developer.

"If you buy a property then rip out the kitchen before letting it, that can class you as a developer and you fall within the CIS scheme.

"It's a grey area at the moment and likely to remain that way for some time."

Buy-to-let investors could face fines if they are not registered with CIS. And contractors working for non-registered individuals could also run into trouble.

The source said: "Contractors carrying out the work are at risk if the Revenue finds that the work should have been carried out within the scope of CIS. They could face fines or losing some part of the contract value."

An HMRC spokesman said: "Ordinary buy-to-let landlords are not within the scope of CIS unless they are building or re-developing buildings as part of that business.

"Those people who buy a succession of properties to renovate and sell on, hiring various tradesmen to carry out different aspects of the work, would probably need to operate the scheme."

So there we have it, typical of this Government. They make rules on the hoof and then worry about the impact afterwards whilst then trying to work out what they were trying to achieve in the first place. No more is this more apparent than the forthcoming Energy Performance Certificate (EPCs). Have you got yours yet? Remember landlords only have until the 1st of October to collect this "ever so useful" piece of paper.

Where would we be without this Government? Anybody who says richer and with more time on our hands gets a gold star - because that's the right answer!

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