To ask - is this tax fraud?

[SinnerSaint]

Friend was gifted a large detached house a little while back. She owns another property which she had a mortgage on. She rented out that house (about three years ago now) though never informed mortgage company and is now selling that house as her primary residence to avoid capital gains. AIBU to be concerned here that a) this is tax fraud and b) she may find herself in a hell of a lot of hot water!
Or have I misunderstood?

She's not money laundering though.

A friend was recently caught out renting her property without a BTL. They refused to remortgage her until she changed it and that was the end of it.

I don't understand the glee on MN today at the idea people are going to get into TROUBLE. With the MAN. You have no idea whether it'll happen or not. Certainly people get away with renting out without a BTL all the time. Obviously that seems to hurt you greatly, but it is what it is.

it's not glee, it is facts in answer to a question.

although if crooks get caught, I don't tend to shed too many tears.

I also wouldn't wish on anyone the thread a while back where the tenant set the house on fire, and the landlord hadn't declared it a rental or insured it. Goodbye house...

THAT is the real risk.

Sorry, I think you should MYOB OP
Agree with adele, some of the posters on this thread sound so self righteous and are beyond dramatic about outcomes.

silly as well to not report a house as rented out.

when i rented out my old flat (after moving in with DH) i told my insurer and they just carried on insuring me at my existing price, because i'd been with them a long time.

would never want to risk a house being uninsured. gives me the chills to think of it!

The gifted house isn't fraud, however if over a certain time (7 years I think) the person who gifted it to her died, she will have to pay inheritance tax on it.

The mortgage has a clause on it, it changed a while back after so many months, however at 3 years I would say if she has not informed her mortgage lender then she will be invalidating her insurances.

Also I should say, just because she has not informed her mortgage lenders does not mean she has not informed HMRC

It's not money laundering. That's irrelevant.

There's also nothing to say she didn't pay income tax on the rental income.

The problematic element is that her mortgage company should have been informed. But there's no obvious tax fraud.