HM Revenue and Customs are launching a new Tax Disclosure Campaign to tackle non-compliance associated with offshore companies owning UK property: and will be issuing “nudge” letters from September 2022 to suspects.

HMRC have reviewed data, including the Land Registry to identify non-UK resident corporate owners of UK property which might not have met their United Kingdom tax obligations. Non-resident (“NR”) companies are those which are not registered in the United Kingdom: albeit they may have some degree of presence here. The tax office will be sending one of two different types of “nudge letter”; both to include a “Certificate of Tax Position”. The letters are addressed to the NR company but also recommend that any connected UK-resident individual should seek professional advice to ensure that their personal tax affairs are correct: particularly in respect of related anti-avoidance provisions.

Letter A will be sent to NR companies that own UK property and may need to disclose either: income received as a Non-Resident Corporate Landlord; or a liability to the Annual Tax on Enveloped Dwellings. NB: The anti-avoidance Transfer of Assets Abroad provisions can cover UK-resident individuals: with any interest in the income or capital of a non-resident landlord; or who benefit in some way (e.g. by occupying a property) from an transfer of assets outside the UK.

Letter B will be issued to non-resident companies that appear to have disposed of (e.g. sold) UK residential property between 6 April 2015 and 5 April 2019 but did not submit a Non-Resident Capital Gains Tax (“NRCGT“) return.
Where the company purchased the property prior to April 2015 and the whole of the gain is not charged to NRCGT, then any part not charged can be attributed to the company’s participators (e.g. shareholders and directors). Such companies can also be liable to other tax liabilities, such as: UK tax on rental profits; Income Tax under the transactions in land rules; and/or he Annual Tax on Enveloped Dwellings.

What does it mean for me?
If you receive such a letter, then unless a rare mistake has been made about your identity, HMRC do actually have genuine information about your company and its UK property holdings. This does not necessarily mean your UK tax affairs are wrong, or that you owe more tax. But, as the tax investigators will have done some preliminary checking of your affairs; it is clear that they suspect that not all taxable income or gains have been properly declared. They are giving you a chance to come forward and sort things out: without putting you through the rigours of an in-depth tax investigation.

So, you should check your tax position. You may need specialist advice: especially if you are not sure of the basis on which property income and gains are taxed in the UK: or, for shareholders, if you believe you may have been non-resident or non-domiciled in the relevant years.

Ignoring the letter will lead to follow up action by HMRC: eventually leading to investigation – and possibly criminal prosecution.

How can Lynam Tax Disclosure Experts help me?
HMRC and the leading professional bodies (e.g. ICAEW, ACCA, CIOT) state that advisers should not undertake work which they are not competent to perform. The services of suitably qualified and experienced specialists should be obtained.

Our Tax Disclosure Specialists have enormous experience in dealing with investigations and disclosures in respect of both UK-residents and non-residents: including the complex world of the taxation of non-UK resident corporate vehicles. We have the training; knowledge; skills; and deep experience to properly manage your disclosure to HMRC. HMRC use dedicated specialist investigators to deal with offshore issues: you need dedicated; experienced; and committed experts on your side.

To find out how we can help you and for a free, confidential, and no obligation discussion, call:
Paul Lynam: 0845 643 9997
Andrew Nutbrown: 07718 778710