29 August 2022 • Document
A short article by Jon Hanifan and Sutharman Kanagarajah.
In a previous flyer, published last month, we discussed UK law now requiring non-UK entities, which wish to buy, sell or otherwise transfer property or land in the UK, to:
In addition to these new obligations, Her Majesty’s Revenue & Customs (“HMRC”) has recently communicated (to professional tax bodies) its intention to focus on ensuring longer standing tax obligations are being met.
HMRC is, in September 2022, to launch a “campaign” aimed at addressing, in its view, non-compliance by overseas corporates owning UK property.
HMRC’s actions have, it says, been driven by a data review, including from the Land Registry.
HMRC will issue one of two letters to taxpayers it considers in scope. Each letter will be accompanied by a “certificate of tax position”. More on the latter later.
The two letters will either be:
This is essentially a form that HMRC asks be completed and returned, irrespective of whether the recipient has additional tax liabilities to disclose or not.
A UK taxpayer could, for example, use the certificate of tax position to disclose a UK tax underpayment or alternatively make a statement that their tax affairs are fully compliant and up to date.
In HMRC’s view, use of the certificate of tax position helps minimise the number of ‘no response’ cases they would otherwise need to follow up.
Our Tax team, containing both corporate and personal tax experts, is well placed to help you understand both:
While the letters are expected to be addressed to the property-owning body corporate, both are also anticipated to recommend that this entity asks connected UK-resident individuals to ensure their personal tax affairs are up to date in respect of the related anti-avoidance provisions.
HMRC has, in the past, generally given taxpayers 30 days to respond. We strongly suggest, however, that a certificate of tax position not be returned without first taking professional advice. There is not always a legal obligation to return the certificate of tax position at all, although this is to be balanced against the desire of the compliant taxpayer to put a stop to HMRC’s letters. HMRC have in the past accepted a letter in lieu of the formal certificate, and this may be the more appropriate response.
We will be pleased to discuss all of the above with you.
If you have any queries in respect of this article, please do not hesitate to contact Centralis or Wheelhouse Advisors.