Beginning in November 2022, two batches of nudge letters will be distributed. These are meant to urge recipients to disclose any identified unpaid UK tax liabilities to HMRC and request a review of potential non-compliance.
The Chartered Institute of Taxation (CIOT) states that HMRC will start a new campaign to address non-compliance associated with offshore corporations owning UK property. Using information from the Land Registry and other sources, HMRC has reviewed non-resident corporation owners of UK real estate.
HMRC identified overseas property owners who might still need to comply entirely with their UK tax obligations thanks to this review. Now, HMRC is anticipated to write to those identified, urging them to assess their UK tax position and, if necessary, to disclose any difficulties to HMRC.
You can receive one of two distinct types of letters. One can be titled “Disclosure on Annual Tax on Enveloped Dwellings/Non-Resident Landlord Liabilities,” and another titled “Disposal of Interest in UK Residential Property” is in the category of real estate.
Both letters advise the corporations to ask connected UK residents to make sure their personal tax filings are current in light of any applicable anti-avoidance laws. The first letter is intended for non-resident landlords who might have made money from renting a property in the UK.
HMRC may also send the letter to an offshore corporation that was expected to file a return and pay the annual fee under the Annual Tax on Enveloped Dwellings (ATED) system. The letter will also address UK citizens who might have been covered by the Transfer of Assets Abroad (ToAA) anti-avoidance provisions.
We advise seeking tax guidance from Legend Financial if you have concerns where the individual shareholders may have neglected to disclose the ToAA income on their tax returns in the UK since they might not have been aware being subject to UK tax on this income.
The second letter will concentrate on foreign businesses that might have sold a residence in the UK between April 6, 2015, and April 5, 2019. Any such disposal might have resulted in a filing requirement under the Non-Resident Capital Gains Tax (NRCGT) regime, and any associated NRCGT liability should have been paid.
By January 31, 2023, foreign organisations that already possess property in the UK must register with Companies House and give information about their registrable beneficial owners and managing executives. This applies to foreign companies who purchased real estate or landed in Scotland on December 8, 2014, England and Wales on or after January 1, 1999, and Northern Ireland on or after August 1, 2022.
References
‘HMRC to Target Offshore Companies Owning UK Property. 2022. Tax Journal: https://www.taxjournal.com/articles/hmrc-to-target-offshore-companies-owning-uk-property
dev. 2022. ‘HMRC Launch Offshore Property Owners Campaign | ECOVIS Wingrave Yeats’, ECOVIS Wingrave Yeats: https://www.ecovis.co.uk/news/hmrc-launch-offshore-property-owners-campaign/
‘Offshore Property Ownership – HMRC Campaign – Edwin Coe LLP’. 2022. Edwincoe.com: https://www.edwincoe.com/blogs/main/offshore-property-ownership-hmrc-campaign/
‘HMRC Launches a Campaign Focused on Offshore Companies Owning UK Property’. 2022. Evelyn Partners (Evelyn Partners): https://www.evelyn.com/insights-and-events/insights/hmrc-launches-a-campaign-focused-on-offshore-companies-owning-uk-property/
‘HMRC to Launch Tax Collection Campaign for Offshore Property Owners’. 2018. Moore Kingston Smith: https://mooreks.co.uk/insights/hmrc-to-launch-tax-collection-campaign-for-offshore-property-owners/
