If you’ve fallen behind on declaring rental income, you’ve probably come across two very different-sounding terms: the Let Property Campaign and an HMRC tax investigation. They can lead to the same place — you paying the tax you owe — but the route, the paperwork, and crucially the penalties can be worlds apart depending on which one applies to your situation.
Not sure which route applies to you, or whether you should come forward before HMRC contacts you? Book a free 15-minute consultation with Felix Accountants and we’ll talk through your specific circumstances, in confidence, with no obligation.
What Is the HMRC Let Property Campaign?
The Let Property Campaign (LPC) is a voluntary disclosure facility that HMRC has run since 2013. It allows individual UK landlords with undeclared or under-declared rental income to come forward, calculate what they owe, and pay it — usually on more favourable terms than if HMRC discovered the problem itself. It applies to residential property income only; landlords holding property through a limited company or trust cannot use the LPC.
Once you notify HMRC of your intention to disclose, you’re generally given 90 days to work out the tax, interest and any penalty due and submit your disclosure. It’s a structured, self-managed process, and it is entirely optional — nobody forces you into the LPC.
What Is an HMRC Tax Investigation?
A tax investigation, by contrast, is something HMRC initiates. It isn’t voluntary, and once it starts, you lose control over the pace and shape of the process. There are two versions worth understanding.
Formal Compliance Checks and Enquiries
These are opened when HMRC has reason to believe a return is wrong — often triggered by data mismatches from sources like the Land Registry, letting agents, mortgage lenders or short-term letting platforms. HMRC will typically request records, ask questions, and can go back several years depending on the behaviour involved.
Code of Practice 9 (COP9)
Code of Practice 9 is reserved for cases where HMRC suspects deliberate tax fraud. It’s a civil process, offered as an alternative to criminal prosecution, but it requires you to sign a formal contract admitting to any deliberate wrongdoing and disclose everything in full. It carries much higher stakes than either the LPC or a standard compliance check, and professional representation is essential from the outset.
Key Differences at a Glance
| Factor | Let Property Campaign | HMRC Tax Investigation |
|---|---|---|
| Who starts it | You, voluntarily | HMRC |
| Typical penalty range (careless error) | 0% to 30% (often much lower when unprompted) | 15% to 30% or higher, since the disclosure counts as prompted |
| Who controls the pace | You, within the 90-day window | HMRC |
| Public “naming and shaming” risk | Very low, if full and accurate | Possible for serious, deliberate cases |
| Available for companies/trusts | No | Yes |
Why Timing Matters: Prompted vs Unprompted Disclosure
This is the single biggest factor in how much you’ll ultimately pay. Under HMRC’s penalty rules, an unprompted disclosure — one made before HMRC has any reason to believe it’s about to find the error — attracts a far lower penalty than a prompted disclosure made after contact from HMRC. For a careless error, an unprompted disclosure can start at 0%, while a prompted one is very rarely below 15%. Once HMRC has sent you a nudge letter or opened an enquiry, that lower band is gone for good, no matter how cooperative you are afterwards.
Which Route Applies to You?
In practice, most landlords who haven’t yet heard from HMRC are free to use the LPC on an unprompted basis. If you’ve already received a nudge letter, you can generally still use the LPC, but your disclosure will be treated as prompted, meaning a higher minimum penalty. If HMRC has gone further and opened a formal enquiry — or suspects deliberate concealment — the LPC route is usually closed to you, and you’ll be dealing with a standard compliance check or, in serious cases, COP9.
Working out exactly how many years of rental income need to be disclosed also depends on which category your behaviour falls into — careless errors generally require fewer years back than deliberate non-disclosure.
What Happens If You Do Nothing?
Doing nothing is the one option that reliably makes things worse. HMRC’s Connect system cross-references data from letting agents, banks, mortgage applications and property platforms, so undeclared rental income is increasingly likely to surface on its own. If it does, you lose the ability to make an unprompted disclosure entirely, and any subsequent enquiry starts from a position where HMRC is already suspicious.
Common Mistakes Landlords Make
- Waiting to see if HMRC “actually finds out” rather than disclosing proactively
- Assuming the LPC applies to a property held in a limited company (it doesn’t)
- Submitting a partial disclosure and leaving out a property or income stream, which HMRC can treat as deliberate concealment if later discovered
- Trying to negotiate a COP9 case without professional representation
How Felix Accountants Can Help
Whether you’re weighing up an unprompted LPC disclosure, responding to a nudge letter, or facing a formal enquiry, getting the behaviour classification right from the outset has a direct impact on your final bill. We handle the calculations, the correspondence with HMRC, and the disclosure itself, so you’re not navigating it alone.
Frequently Asked Questions
Can HMRC open an investigation while I’m in the middle of an LPC disclosure?
Generally, if your LPC disclosure is accurate, complete and submitted in good faith, HMRC treats it as a self-contained process and won’t open a parallel enquiry into the same rental income. However, HMRC does reserve the right to investigate further if the disclosure appears incomplete or inconsistent with information it already holds.
Does the Let Property Campaign apply to companies?
No. The LPC is only available to individual landlords with undeclared income from residential property. Landlords who hold property through a limited company need to correct their position through Corporation Tax filings instead.
What if I’ve already received a nudge letter?
You can usually still use the Let Property Campaign, but your disclosure will be classed as prompted, which generally means a higher minimum penalty than if you’d come forward first. It’s still typically far better than waiting for a formal enquiry to open.
Will using the Let Property Campaign guarantee I avoid prosecution?
The LPC does not offer a formal, legally guaranteed immunity from prosecution in the way that Code of Practice 9 does. In practice, criminal prosecution of landlords who make a full, honest disclosure is rare, because HMRC’s primary objective is recovering the tax owed rather than pursuing individuals through the courts.