Airbnb HMRC Compliance Check Letter - reporting your Airbnb income and your tax obligations - ESDG Accountancy

Airbnb HMRC Compliance Check Letter – reporting your Airbnb income and your tax obligations

Photo of author

Ed, Chartered Accountant

Are you an Airbnb host earning income through short-term rentals looking to get your tax affairs in order?

Perhaps you have received an Airbnb compliance check or “check of tax position” letter from HMRC or simply want to get your affairs in order and up-to-date?

Airbnb is a great extra income source to supplement other income streams or even form a full business in its own right. Many Airbnb owners first entered the industry casually, and therefore may not have had the full knowledge of their responsibilities when it comes to HMRC and paying personal tax.

Airbnb Logo

You may have recently heard that Airbnb is now sharing data with HMRC with regards to naming individuals who have received income from their platform – this data goes back as far as 2017. It is our understanding at HMRC have now began processing this data, and in 2023 have began sending out nudge letters or compliance check letters to those they believe have not declared or incorrectly declared Airbnb income.

This may of course be very alarming if you have received one of these letters or on reading this believe you may have underdeclared income in a prior tax year. Our advice is to stay clam and contact a professional advisor who can help you put matters right – if you have overdue returns then you should ask your advisor to submit these as a priority.

We have worked with many landlords and Airbnb small business owners over the years ensure they stay complaint with HMRC. If you are in doubt about your tax situation, the best thing to do is act now and seek advice before it is too late.

Contact us today or call us for a response within 1 working day – often much faster.

HMRC Contractual Disclosure Facility for Airbnb Income

The HMRC Contractual Disclosure Facility is primarily known for conducting significant fraud investigations. However, it’s important to understand that this facility can also be used by individuals seeking to update their tax affairs voluntarily while gaining protection from legal action.

If you have identified any tax shortcomings or omissions related to your Airbnb income and wish to correct them, we can guide you through the process. By voluntarily disclosing your tax discrepancies to HMRC and participating in the Contractual Disclosure Facility, you can avoid criminal prosecution, providing a tremendous sense of relief and reducing stress.

Why Choose to Disclose?

There are many reasons why you might want to inform HMRC about inaccuracies in your Airbnb income. Asides from being the right and legal action to take, this will also prevent you from risk of prosecution relating to these matters, and give you the best chance of reducing any potential interest or penalties from HMRC in regards to overdue tax.

ESDG Accountancy can support you with this full process and treat your enquiry with the strict professionalism and are never judgmental to your situation – we can assure you we have seen many similar situations in the past.

Before starting any communications with HMRC, we highly recommend contacting our knowledgeable Chartered Accountants. We can provide you with the best guidance on how to proceed, ensuring a smooth disclosure process. We offer a free initial consultation on these matters for new enquiries and will give you honest, impartial advice – for further insight please see our glowing testimonials.

Expertise in HMRC Compliance for Airbnb Hosts

We have years of experience in dealing with HMRC and have assisted numerous individuals and business clients in their tax affairs. We pride ourselves on providing comprehensive guidance in a supportive and understanding environment – keeping you informed every step of the way.

Additionally, HMRC often runs campaigns that allow you to report specific mistakes and potentially receive preferential treatment when settling outstanding tax debts. As your trusted advisors, we stay up-to-date on such efforts, enabling us to help you with relevant disclosures effectively. HMRC are currently as of August 2023 running a Let Property Campaign which gives taxpayers the chance to report underdeclared income.

Schedule a Free Consultation

If you are considering making a voluntary disclosure to HMRC regarding your Airbnb income, don’t hesitate to seek guidance from our experienced team. We offer free initial consultations to ensure we can provide the assistance you need before you commit to our services.

Questions and Answers:

  1. I have received a compliance check letter from HMRC which I believe relates to my Airbnb income, what should I do?
    Every year HMRC carry out a number of compliance checks into tax payers records – the reasons for these can vary, sometimes they may be completed random and otherwise they can relate to information they have become aware of such as a tip-off or irregularity in your returns. If you have received a “compliance check letter” or “check of tax position” from HMRC and have unreported Airbnb income. The letter may state they have information you have received income from “digital platforms” which would further indicate this is the case. If you receive one of these letters we suggest engaging a professional such as ourselves who can help with these matters. Click here to contact us.

  2. I have read in the media that HMRC are doing checks on Airbnb hosts – I am concerned about my own tax affairs – what should I do?
    If you have only recently became aware that you were required to pay tax on your Airbnb income or needed submit a tax return to HMRC, then the important thing is to stay calm – the good news is you have spotted this before HMRC have come to you. Our advice is to engage a Chartered Accountant right away – inform them of the situation and provide them with your full records so they can make the necessary returns without delay.

  3. What are my tax obligations as an Airbnb host?
    If you are self-managing an Airbnb property HMRC considers you to be “in business”. You are generally expected to submit a tax return each tax year ending 5th April – both the return and tax due for each tax year is due by the end of the following January. Business owners are expected to keep good records – being able to evidence their expenditure on income. You also need to inform HMRC you are trading as a business. It is advisable to engage the services of a Chartered Accountant to ensure matters are handled correctly – this will not only ensure you are compliant but reduce your admin burden and assist with effective legal tax planning.

  4. What are the penalties for underpaid tax?
    HMRC penalties can vary hugely and are often based on a percentage of the tax due – often between 0% and 100%. There may also be late filing penalties and interest on overdue tax incurred. The level of penalties depends on if you are making a “prompted” or “unprompted” disclosure – with more favor being given to unprompted. HMRC will assess if the taxpayer took “reasonable care” in their behaviour – this usually means you kept accurate records and sought advice from an advisor when appropriate – in these instances HMRC are very favourable to the case and may not issue any penalty. If the error was found to be deliberate, then the penalties will usually exceed 20% depending on the severity of the situation.

  5. What is a HMRC compliance check?
    A compliance check or HMRC is enquiry is to verify the precision of your Self-Assessment submission (or lack of if you have not made one). HMRC conducts both formal and informal checks. While informal checks involve simple questions, formal ones come with an enquiry notice and may require supporting documents. It’s essential to respond promptly as HMRC must adhere to strict time limits for the enquiry notice to be valid.

Don’t Face HMRC Alone

Disclosing information to HMRC can be a daunting task, especially concerning your Airbnb income. ESDG Accountancy can talk you through the process and handle the enquiry for you, ensuring accuracy and completeness, helping you get the best possible outcome with HMRC.

Contact us today or complete the form below to schedule your free consultation and take the first step towards HMRC compliance and peace of mind. We will respond to you within 1 working day – usually much faster!

Contact Us

About the author

Ed is qualified Chartered Accountant and founded ESDG Accountancy in 2020. He has gained extensive experience in various sectors, working with business owners, international groups, & private equity investors.