Landlords with private tenants are often asked to pay a deposit. Under the tenancy deposit scheme, landlords are obliged to protect their tenant’s money in an approved scheme. This is explained in the booklet “Obtaining and using Tenancy Deposit information”.
The CIOT reports how HMRC are writing to landlords who are believed to have under-declared rental income in their 2020-21 returns. HMRC are basing this on details of deposits put into a tenancy deposit scheme. The CIOT site provides details of the letter template being used by HMRC.