Have Tax Questions? Ask a Tax Expert for Answers ASAP
First off, there is no need to be intimidated by the thought of contacting HMRC. Many landlords have failed to disclose rental income in the past. I've dealt with many cases. So long as you are honest with HMRC, you should have no problems.
It would be preferable to come clean with HMRC before they find you regardless of the new HMRC tax campaign for landlords who haven't disclosed their rental income for whatever reason. Should you not approach the tax office to get your tax situation sorted out, you could face penalties of as much as 100% of any tax due as a result of your non-disclosure of the rental income when they find you. If you approach the Revenue or use the campaign, the penalty will probably be much lower. In previous campaigns run by HMRC, the penalty charged has been as low as 10% of the tax due. There will also be interest charges. The rate charged has been 3% per annum since September 2009.If I were you, I'd be inclined to take advantage of the let property campaign and you can call the number HMRC have set up to find out what you need to do. It will probably involve completing a set of forms designed for the purpose as previous campaigns have. The number to call is 03000 514479 and it is open from 9 am to 5pm Monday to Friday.You may need to regsiter for self-assessment so that you can dislcose rental income in the future. However, if the net income is less than £2,500 per annum and you have a source of income subject to PAYE, you may be able to complete a P810 as opposed to a tax return and pay any tax due through your tax coding instead.There are some notes on tax and rental income which you may find useful here. There are also some notes on previous and current HMRC campaigns here and articles on the let property campaign here and here.I hope this helps but let me know if you have any further questions.