In a further step in HMRC's ongoing campaign targeting offshore company owners, HMRC is sending out nudge letters with a 'Certificate of tax position' to overseas companies who hold UK commercial property.
HMRC's Offshore Property Owners campaign involves inviting owners to engage directly with HMRC to explain why they have not registered for tax or to confirm that they have registered already and declared all their income or that they are not required to register.
If you are contacted by HMRC asking you to review your tax affairs and register, if necessary for tax, the chances are that you have received a so-called 'nudge letter'. This kind of letter should not be ignored. If HMRC's letter has an attached form or certificate you will need to complete that in order to avoid further enquiries.
The consequences for any company ignoring the letter and failing to complete the certificate are that they are likely to face a follow-up enquiry from HMRC. If it is later discovered that the company has not registered for tax when it should have done, it will face higher tax penalties for either Failing to register for tax or, it is already registered for tax but has not declared its profits for making a deliberate error or mistake on a return
The UK's Register of Overseas Entities holding UK properties gives HMRC access to the contact details of the owners or managing agents of overseas entities. The Register at Companies House does not provide the address of the UK property owned. That detail is stored on a different system by the Land Registry. HMRC has the power to access both sets of records, and it runs campaigns aimed at overseas property owners, urging them, that if they are renting out their UK property they will need to register for tax in the UK.
The certificate asks about the company’s tax position. It asks:
Choose which statement is accurate for the company’s circumstances:
- The company needs to bring its tax affairs up to date. The company will declare all its Outstanding UK tax using the disclosure facility detailed in the letter. You must also tell us how the error happened and confirm that the error will not be repeated. How did the error happen?
- The company believes it has correctly declared all its income and gains Reference number(s) Tax year(s)
- The company has not declared income and/or gains as it isn’t liable to UK tax for the following reasons: Please be aware that we will use the information we have to check if the statement you have made is correct. Please return your completed certificate by [date of letter + 40 days].
For assistance in verification for the Register of Overseas Entities, tax investigations or tax assistance contact the Virtual Tax Partner support service at www.VtaxP.co.uk or further useful know-how is included in the guides below.
Useful guides on this topic
A non-resident owner of UK property? Start here
If you are the overseas owner of UK residential land and property, start here to work through your UK tax and legal requirements. A freeview signpost to our non-resident landlords and offshore investor tax guides.
Register of Overseas Entities: At a glance
The Register of Overseas Entities requires overseas owners of UK property to register and report their beneficial ownership to Companies House when they own, buy or sell UK property.
Non-resident landlord scheme
What is the Non-Resident Landlord scheme? How does it work? Who does it apply to? How can I apply to receive rent without a withholding tax deduction?
Different ways of taxing UK property
This guide summarises the different ways of taxing income and gains in respect of the exploitation of UK property.
Annual Tax on Enveloped Dwellings (ATED)
What is the Annual Tax on Enveloped Dwellings (ATED)? Who does ATED apply to? What relief is available and how is it claimed? What are the ATED return filing dates?
Transfer of assets abroad (ToA)
What are the ToA rules? When do they apply? Is there any defence against the rules?
Non-resident CGT: UK property
How and when does Capital Gains Tax apply to non-residents owning UK property?