HMRC are launching a new Tax Disclosure Campaign aimed at tackling tax compliance failures involving non-UK registered companies that own property here.

HM Revenue and Customs investigators have reviewed data from various sources, including the Land Registry; and have identified non-resident corporate owners of property situated in the UK that might not have reported all of their UK tax obligations. The tax investigators are now issuing so-called “nudge letters” to such companies. As well as telling the company to review its own tax affairs, the nudge letters also recommend that any UK-resident individuals associated with the company should ensure that their personal tax affairs are up to date and correct -particularly in respect of the relevant anti-tax avoidance provisions. The letters contain a Certificate of Tax Position (which must be signed) and a Notice of Intention to Disclose form – for the company to complete if it needs to rectify its tax affairs

Letter 1 is being sent to non-resident corporates owning UK property that might need to disclose income received as a non-resident corporate landlord or a liability to the Annual Tax on Enveloped Dwellings (ATED). It also refers to the Transfer of Assets Abroad rules which can tax UK-resident individuals with an interest in the income or capital of a non-resident landlord. These anti-avoidance provisions are complex, and HMRC recommends that any such persons should obtain relevant professional advice; and if necessary regularise their tax affairs.

Letter 2 is being sent to non-resident companies that appear to have made a disposal of UK residential property between 6 April 2015 and 5 April 2019 without filing a Non-Resident Capital Gains Tax (NRCGT) return. Additionally, such companies could also be liable to UK tax on: rental profits; income tax under the Transactions In Land provisions; and ATED. This letter also prompts individual participators in the corporate body (e.g. shareholders and directors) to get professional advice to check that their tax matters are in order. For example, where the company purchased the property before April 2015 and the whole of any overall gain is not charged on the company (whether to NRCGT or otherwise), then that part not charged can be attributed to participators.

In the letters HMRC’s warning states: “If we find that you have not told us everything, we will view this very seriously. We may open an investigation and consider charging additional penalties”. It also recommends registering for the Contractual Disclosure Facility: “where tax fraud has been committed“

Penalties
The penalty regime for “Offshore Matters” is stringent and imposes significantly higher sanctions than the normal onshore penalty rules. However, there are very substantial reductions to be had for Unprompted Disclosures. And even Prompted Disclosures can qualify for large reductions – if the reports eventually made to HMRC are of “High Quality”. For more information see our page: Penalties for Offshore Matters.

Registration Requirement
Since 5 September 2022 Offshore Entities are required to submit details of the entity and its owners on the new Companies House Register of Overseas Entities. An overseas entity is any body corporate, partnership or other entity that is not governed by UK law. Any such entities that own; buy; sell; or transfer property or land in the UK are required to provide details of their beneficial owners and/or managing officers; and keep this information up-to-date by way of annual reports. Non-compliance can result in: being unable to register or dispose of land; fines of up to £2,500 per day; prison sentences of up to 5 years.

What does it mean to me?
If you are a director or shareholder of, or have a significant interest in, a company registered outside the UK (or any Offshore Entity) that at some time since 2015 owned UK property, then you should check the tax affairs of both the company/entity and yourself. And if land was acquired after 1 January 1999 you should check the Registration position. These are complex matters which are dealt with by specialist tax officers. HMRC recommend that you seek similar specialist help to ensure that your tax affairs and those of the company are up-to-date and correct.

How can Lynam Tax Disclosure Specialists help me?
If you or a company (or other legal entity such as a trust) that you are associated with receive one of these letters then Lynam Tax Enquiry Experts can provide you with the specialist support you need. Our experts have enormous experience of Tax Investigations and Tax Disclosures involving offshore matters: and can advise you regarding these complex issues and, if necessary, bring the HMRC enquiry to a conclusion on the best possible terms.

FOR A CONFIDENTIAL AND FREE INITIAL DISCUSSION PHONE NOW:

PAUL LYNAM: 0845 643 9997
ANDREW NUTBROWN: 07718 778710