As we step into the new year, HMRC has initiated a series of nudge letters targeting various compliance areas. These letters are designed to encourage taxpayers to review and correct their tax affairs voluntarily. At HaysMac, we understand the complexities and potential stress these letters can bring. Here, we outline the key areas HMRC is focusing on and the importance of seeking professional advice.

Key Areas of Focus

1. Business Asset Disposal Relief Lifetime Limits HMRC is scrutinizing claims for Business Asset Disposal Relief (BADR), particularly focusing on lifetime limits. This relief allows individuals to pay a reduced rate of Capital Gains Tax on qualifying business disposals. Ensuring your claims are within the lifetime limits is crucial to avoid potential penalties.
2. Private Equity – VAT Accounting Treatment The VAT accounting treatment for private equity transactions is another area under HMRC’s lens. Properly accounting for VAT in these transactions can be complex, and errors can lead to significant liabilities. It’s essential to review your VAT treatment to ensure compliance.
3. ATED – Qualifying Business Property Relief Annual Tax on Enveloped Dwellings (ATED) applies to residential properties held by companies. HMRC is focusing on claims for qualifying business property relief, which can reduce the ATED charge. Accurate claims are vital to avoid disputes and penalties.
4. Estate Agents – AML Supervision Estate agents are required to comply with Anti-Money Laundering (AML) regulations. HMRC’s nudge letters are reminding estate agents of their obligations and the importance of robust AML procedures. Non-compliance can result in severe penalties and reputational damage.
5. Delivery Drivers – Self-Assessment and PAYE Registration HMRC is targeting delivery drivers who are not registered for self-assessment or paid via PAYE. This sector has seen significant growth, and HMRC is keen to ensure all income is correctly reported and taxed. If you fall into this category, it’s crucial to review your tax position.

Seek Professional Advice

Receiving a nudge letter from HMRC can be daunting. It’s important to seek professional advice immediately. While the letter may offer a disclosure facility, it’s essential to understand the process and all available options. The disclosure may not always be the most appropriate route for you.

At HaysMac, our Tax Disputes & Resolutions team, led by Partner Danielle Ford, is here to guide you through the options and process. We aim to ease the stress of communicating with HMRC and ensure you make informed decisions.