Landlords using popular short-term websites to let their homes are being warned they could fall foul of the taxman unless they declare the earnings.
HM Revenue and Customs are thought to be taking a close interest in the booming marketplace for people wishing to let out their homes via sites such as US-based Airbnb.
The firm, founded in 2009, has capitalised on the desire for 'unique travel experiences' by allowing home owners to advertise house, apartments and even castles to millions of their 'guests' online at the click of a button.
However, property owners must register their details and there is a belief that names and addresses of those cashing in could be opened up to the HMRC following similar moves in Ireland.
Many who receive rental income through online sites – which have seen phenomenal grown in Scotland – are often unaware their liabilities are the same as those using traditional agents.
Fears are also growing Scots Airbnb users will be subject to additional scrutiny by HM Revenue and Customs (HMRC) after Ireland forced the company to reveal its users to tax officials last year, to ensure they were paying tax.
The business has since denied it will do this in the UK. But it may have little choice, as HMRC has the power to force companies to hand over the details of customers thought to be hiding income.
Bruce Wilson, a tax specialist at Murrison and Wilson accountants in Glasgow, said that HMRC were already clamping down on buy-to-let landlords by asking for their details from letting agents across the country, which in the future could expand to online companies.
He explained that many people are also unaware of their tax liabilities when renting out buy-to-let properties.
“I think it is quite a big problem, I think a lot of people make a fundamental mistake in thinking that if they’re not on an interest only mortgage, so capital and income, the whole payment they’re making to the bank or building society is deductible and in fact it’s only the interest which is."
He added: “So I think it is a lucrative ground for the Revenue to dig around in. The professional advice is you should tell the tax man. If people are in doubt they should contact the tax man.”
The accountant said there had been a huge grown in buy-to-lets in the past ten years - many of which are now being advertised independently on sites such as Airbnb - as an alternative to other investments, especially as people have started to move away from traditional pensions.
Airbnb has said it advises people to comply with UK regulations and ensure they declare any taxable income.
Properties currently advertised on the website include 12th century Dairsie Castle, near St Andrews in Fife, which accommodates 13 people, for £500 a night.
It is available for a deposit of just £500 a night.
Meanwhile, a smaller "romantic" medieval tower near Peebles is available for £200 a night. One user said they had booked it as a last-minute getaway , describing it as a "Fantastic place to stay in a glorious part of the world. The ultimate escape." Another, Craigston Castle, in Aberdeenshire costs £600 a night.
There is no suggestion that any of these owners are not paying their liabilities.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here