Are there risks to a landlord if their tenants are committing tax fraud?

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  • Are there risks to a landlord if their tenants are committing tax fraud?

    I need to be careful here not to give information which could identify the individuals concerned, even to them as its a public forum, but I am trying to identify the risks to me IF my tenants are not paying the required tax on their income.

    The obvious risk is that HMRC take action against one or both of them which leaves them unable to pay the rent but unwilling to give up possession of the property. This could include imprisonment of one or both of them or such heavy fines that they are left unable to cover day to day expenses. Does anyone know how common such situations are?

    Are there any other risks to me as landlord?

    I should add that at this stage I am not certain about whether they are paying their taxes and if they were not, I would in no way condone it.

    Thanks in advance for your experience on this.

  • #2
    Not your problem how much your tenants pay or don't pay in tax.

    Your tenants can be fined for harassing someone and then don't have money to pay the rent.
    Can be taken to court for stealing and fined for not paying for goods, and then they can't pay the rent.
    Can be sent to prison for theft, then they can't pay the rent.

    They lose their job and can't pay the rent, and IF they apply for housing benefit, it could be 2 or 3 months before you get rent.

    Forget your question. Life's a bitch, and then you die.

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    • #3
      Unless their fraud relies on your knowledge or you are involved, there's no requirement to act on your suspicions.
      I'd say you've identified the biggest risk - but, other than your knowlege of it, the situation probably isn't that different from any landlord - who knows what a tenant is doing in reality?

      If you are seriousl concerned, any conversation with a solicitor would be legally privileged and they'd tell you should there be an obligation for them to report what you were telling them.
      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

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      • #4
        Not sure if these are existing or prospective tenants. If prospective tenants aren't earning enough without fiddling their tax, then you should not take them on.

        Exisiting ones? Not really my problem.

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        • #5
          Thanks for all that. I did speak to a solicitor and they were also reassuring about me having no real liability.

          They are earning a lot of money between them, and could each afford the rent on their own so the risk is probably fairly small. I suppose there is a concern that they will find it difficult to ever move on because they would be afraid of referencing questions etc. However, that is not necessarily a bad thing for a landlord and at the end of the day if I need the property back I don't think I would have a problem.

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          • #6
            My concern of likely cheats like this is they'll be fiddling other things also (perhaps evidence of earnings...). Whatever, if true, not the sort of person I'd want to do business with, if some evidence, I'd evict
            I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

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            • #7
              unless you have concrete proof none of your business and doing anything about it could be harassment. If you have proof then any tax fraud means honest taxpayers are paying more.

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