Guidance

Record keeping for the Non-resident Landlords Scheme

Updated 10 November 2023

HMRC may carry out compliance checks to make sure you comply with your obligations under the NRLS.

This section gives guidance on record keeping and the audit. It does not cover the responsibilities of record keeping outside of the NRLS.

You should not discard records that a landlord may need for any tax returns they have to make.

Information you’ll need to provide

If you operate the NRLS you must submit the following quarterly and annual returns:

• calculation and payment of tax for letting agents
• annual returns and certificates for letting agents
• calculation and payment of tax for tenants
• annual returns and certificates for tenants

You must also give other information when requested by HMRC.

We may need to check information to make sure you’re meeting your obligations under the Scheme. Therefore, you must make the following records available for inspection:

• books
• documents
• other records you have or control

Records

The rules of the NRLS mean you do not need to use prescribed record keeping systems. Records must show that you have met your obligations under the Scheme. For each non-resident landlord, you should keep:

• a record of rental income received by the letting agent or paid by the tenant
• copies of any correspondence with the landlord about their usual place of abode

Unless you are authorised to pay rental income with no tax deducted, you should also keep:

• a record of expenses paid
• invoices and receipts (or copies) to provide evidence of expenses paid

Landlords need to keep records to allow them to submit correct and complete tax returns.

Failure by a landlord to keep proper records could result in the landlord having to pay a penalty. You should discuss this with a landlord before disposing of any records relating to that landlord’s business.

You must keep a record of the rental income you received or paid, which should show the date and amount of each receipt or payment.

The record of expenses should show:

• the date of the payment
• the amount of each payment
• a description of the expense

For example:

• 16 September 2019
• gardening
• £25

You may keep records on:

• microfilm
• microfiche
• any other medium that preserves an exact copy of the original document

If you wish to keep documents in this way, contact HMRC before you destroy the originals.

If possible you should keep records for the last 6 tax years, until 31 March of that year.

However, unless auditors visit you for the first time it’s unlikely they will ask to see records older than the last 4 tax years.

Penalties and interest

There are penalties for either failing to:

• make records available for inspection
• give information (if asked for it)

The maximum penalty for failing to provide information is £300. If the failure continues after this, there are penalties of a maximum of £60 for each day the failure continues from the day the first penalty was given.

If you underpay tax due, HMRC may charge interest from the date tax should have been paid to the date it was paid.

We may also charge a penalty if you submit incorrect quarterly or annual returns of up to £3,000.

Find more information about penalties for inaccuracies and calculating the penalty.

HMRC compliance checks

Non-resident landlords who have paid tax

Under the NRLS you must:

• show your rental income on your tax returns
• pay your tax

If you have failed to account for tax under the Scheme, we’ll usually try to recover the tax from you.

We’ll usually agree to recover only interest and penalties if you’re able to show the non-resident landlord has either:

• already paid any tax due on the rental income
• no liability to tax on it

You have 30 days from being sent an auditor’s report to show this to the auditor’s satisfaction. After that date the auditor will press for recovery of tax from you.

Further information

Contact the NRLS Helpline for information about the use of the Scheme.

If you have queries about the operation of the NRL Scheme, write to HMRC at:

Charities, Savings & International 1
HM Revenue & Customs
BX9 1AU

You cannot transfer a notice you hold to a new letting agent or tenant if either:

• a non-resident landlord changes letting agents
• a tenant does not have a letting agent

In these circumstances, the landlord should write to HMRC with details of the new letting agent or tenant.

We will then send a notice to the new letting agent or tenant. New letting agents or tenants must deduct tax until they receive a notice from HMRC.