Tax chiefs chase Airbnb hosts who don’t pay up

Airbnb users face a 20-year tax probe amid a crackdown on holiday let owners who fail to declare their incomes.

The online holiday lets giant has been forced to share its users’ income details with HM Revenue & Customs to help officials identify people who owe tax. Airbnb has handed the tax authority all of its users’ earnings data going as far back as the 2017-18 financial year.

The data will help HMRC identify those making money from letting their properties without declaring it.

Since February, HMRC has sent 800 letters to people that it suspects have not paid enough tax, reminding them that they need to disclose income earned from letting out a property through an online rental platform.

The tax authority does not know exactly how much tax remains unpaid on holiday lets but is “working to build a more detailed understanding of the holiday let sector and who is operating in it”, The Daily Telegraph understands. HM Treasury previously said more than half of people using “sharing sites” did not think they had to pay tax on the income they made.

Experts said property owners could face criminal prosecution and penalties of up to 30pc of the tax owed if they are found to have failed to pay income duties.

Richard Morley, a partner at accountancy firm HW Fisher, said the crackdown shows HMRC is concerned that people using Airbnb and other holiday let platforms are not paying the tax needed. He said: “Getting information from the likes of Airbnb will be a bit of a goldmine.”

If HMRC obtains evidence that tax has been unpaid in a previous year, the tax authority can open an investigation to obtain information going back up to 20 years under so-called “discovery laws”, he said.

He said the penalties are “subjective”. If it is deemed to be a “innocent error”, there may not be any penalty, but if seen to be deliberate then the penalty can be up to 30pc of the tax owed, he added. People who have earned large amounts of income or submitted incorrect tax returns are more likely to be found to be careless.

Those renting properties on Airbnb can make up to £1,000 a year before tax, which is protected by the “trading allowance”. Any profits above this threshold must be declared to HMRC.

People renting out a room in their house rather than their whole property can earn up to £7,500 a year taxfree as part of the Government’s Rent-a-Room scheme. Those who choose to evade paying tax which is due could face higher penalties and potential criminal prosecution.

An Airbnb spokesman said: “Hosts want to pay their fair share of tax and we want to help, which is why Airbnb partners with industry experts across the UK to help hosts understand and follow tax rules.”

A spokesman for HMRC said: “This is routine activity – each year we send out thousands of reminder letters on various areas of tax.”