Non-Resident Landlord Scheme

Time limit for providing evidence of tax paid is reduced to 30 days

The first edition of a new bulletin for letting agents and tenants has been published, Non-Resident Landlord (NRL) Scheme - Bulletin No 1

This issue introduces changes to the time limit for providing evidence of tax paid by landlords, together with some commonly asked questions and answers and further information.

Letting agents and tenants who pay rental income to non resident landlords should deduct tax unless they have an HMRC approval notice (form NRL 8) addressed to their letting agency. If HMRC discovers that a letting agent or tenant has failed to do this, it usually seeks to recover the tax. However, where the landlord has paid the tax on any rental income or had no liability, the HMRC auditor will normally only recover interest and penalties.

Auditors have always allowed letting agents and tenants 90 days to provide evidence that the landlord has paid the tax or had no liability; see paragraph 12.35 of 'The Non-resident Landlords Scheme. Guidance notes for letting agents and tenants’.

HMRC said last week that it would reduce this to 30 days for all audits starting after the date of the bulletin. In fact the bulletin itself does not seem to be dated, so we presume this means 10 March 2010 when it appeared on what’s new. The reason given for reducing the time was that use of email and better communications made 90 days unnecessarily long.