HMRC launched a campaign in September 2022 to tackle non-compliance linked to offshore corporates owning UK property. Based on specific data, HMRC have identified non-resident corporate owners of UK property who have potentially not met all of their UK tax obligations. The data will be used to issue one of two nudge letters which will be accompanied by a Certificate of Tax Position.
HMRC nudge letters
Of the two letters, one will be issued to offshore corporates owning UK property where income may have been received as a non-resident landlord or the Annual Tax on Enveloped Dwellings (ATED) may apply. Even though the letter will be addressed to a corporate entity, HMRC are recommending connected UK resident individuals to review their personal tax affairs and ensure they are up to date. Emphasis is being made to the Transfer of Assets Abroad (ToAA) legislation and professional advice should be sought.
The second letter will be issued to offshore corporates that appear to have disposed of UK residential property between 6 April 2015 and 5 April 2019 without filing a non-resident Capital Gains Tax return. Once again, HMRC are recommending that connected UK resident individuals review their personal tax affairs to ensure they are up to date.
What action should you take on nudge letters?
You do not need to await an HMRC communication; if a disclosure is required, we recommend you approach HMRC before they approach you. Such action will allow greater mitigation of any potential charges.
It is important to remember a nudge letter is not a statutory enquiry into a taxpayer’s affairs, however these letters should not be ignored and appropriate action must be taken. This does not mean signing and sending the requested certificate to HMRC. If HMRC subsequently opens an enquiry and finds an error, failure to take action following receipt of a nudge letter could lead to higher penalties being charged.
A professional tax advisor can guide a taxpayer through the disclosure process and advise, where applicable, the penalty mitigation available. We recommend taxpayers immediately seek professional advice following receipt of a nudge letter, statutory enquiry, or where a taxpayer has found a mistake in their filings to HMRC.
At haysmacintyre we have a wealth of experience in making successful disclosures to HMRC. We have a proven track record in obtaining the most favourable result for clients, allowing them to draw a line under the matter and move forward without further intrusion from HMRC.
Should you require professional advice, please contact Danielle Ford, Head of Tax Disputes and Resolutions.
