By Farhan Nagda FCCA MBA

HMRC is writing to some landlords after comparing information from third parties with the figures held on their tax records. A letter does not automatically mean that tax has been underpaid, but it should never be answered from memory or treated as routine correspondence.

The current campaign matters because HMRC says its information includes data from sources such as tenancy deposit schemes. Separate reporting rules also require many digital platforms to provide seller and property-rental information to HMRC. The result is a much clearer data trail than many landlords expect.

For property owners, the practical question is not simply whether rent was received. It is whether the ownership, income, expenses, disposals and filing position shown in the tax records agree with the underlying facts.

Why has HMRC contacted landlords now?

ICAEW reported on 20 August 2026 that HMRC had sent letters during August where third-party information did not appear to match the taxpayer’s records. The letters ask recipients either to disclose property income or to explain why there is nothing further to declare by the date stated.

This is a targeted compliance exercise rather than a general reminder. HMRC may already have a property address, evidence of a tenancy or information suggesting rental activity. That information can still be incomplete or misleading—for example, it may not identify the correct beneficial owner, ownership share, letting period or allowable costs—but a reasoned reconciliation is needed before any response is made.

Who should take particular care?

A review is especially important for:

• joint owners where the rent has not been reported in the same proportions as the beneficial ownership;
• people who became landlords unexpectedly after moving home, inheriting property or letting a former residence;
• short-term and holiday-let hosts whose platform receipts may not match tax-year accounts;
• non-resident landlords or UK residents with overseas rental property;
• owners who believed the £1,000 property allowance removed the need to review their full position;
• landlords who have sold, transferred or gifted a property and may also have a capital gains reporting issue; and
• individuals whose combined gross property and sole-trade income may bring them into Making Tax Digital for Income Tax.

Why a quick reply can make matters worse

There are two common but equally risky reactions: immediately accepting HMRC’s apparent conclusion, or replying that nothing is due without testing the records.

Rental profit is not the same as rent collected. The correct result may depend on ownership, the period of letting, agent statements, repairs, finance costs, losses brought forward, the property allowance and income already reported. Platform statements may also use calendar-year totals and show amounts after fees, while a UK tax return normally follows the tax year and requires its own calculation.

The status of any disclosure matters as well. ICAEW notes that HMRC’s letter warns that a later disclosure made during a compliance check may be treated as prompted, potentially affecting penalties. HMRC’s Let Property Campaign guidance also makes clear that the number of years and penalty position depend on why the error occurred and whether reasonable care was taken. Those judgements should be supported by evidence, not selected simply because they produce the lowest figure.

What should be reviewed before responding?

Before a response is drafted, the property record should be reconciled across the relevant years. The review will normally need to consider:

• legal and beneficial ownership, including any declarations of trust;
• tenancy agreements, deposit records and letting-agent statements;
• bank receipts and amounts retained by agents or platforms;
• allowable running costs, finance-cost treatment and capital expenditure;
• previous tax returns, property losses and elections or claims;
• periods of private occupation, vacancy or rent-free use;
• any sale, gift, incorporation or change in ownership; and
• whether the response should be a correction, a formal disclosure or an evidence-backed explanation that no additional tax is due.

This does not mean sending every document to HMRC automatically. It means understanding the evidence well enough to give a complete, accurate and proportionate response.

A typical mismatch is not always an undeclared property

Consider a couple who jointly own a rental property but hold unequal beneficial interests under valid documentation. A deposit scheme may identify both names, while only one tax return contains most of the income. That pattern could look inconsistent when viewed through a data-matching exercise.

The correct response would depend on the ownership evidence, the reporting history and whether the tax returns followed that position. It would be unsafe either to divide the income equally without analysis or to dismiss the letter because some rent had already been declared.

How Edge Accountants can help

Edge Accountants provides specialist property-tax support for landlords who receive HMRC correspondence or discover historic reporting concerns. We review the underlying ownership and property records, identify the correct route, calculate the position where necessary and prepare a clear response supported by evidence.

Our role is not to assume that HMRC is right or wrong. It is to establish the facts, protect the credibility of the response and resolve the issue without creating avoidable exposure elsewhere in the portfolio.

This article provides general information and does not constitute tax or legal advice. The correct response to HMRC depends on the precise facts, records and correspondence in each case.