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October 14, 2022
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Offshore Companies - What should I do about my HMRC 'nudge letter'?

How have HMRC Tackled Offshore Non-Compliance in the Past?

Over the last couple of decades, HMRC have introduced a number of changes with the aim of identifying offshore company structures that are not meeting their UK tax obligations. This has included previous ‘nudge letter’ campaigns, the Non-UK Resident Landlord Scheme and the Overseas Property Register. We have previously written an article on the recently introduced Overseas Property Register which can be found here.

HMRC have recently reviewed information held by them (and information from other sources such as the Land Registry) and have identified offshore companies that they are seeking responses from as to whether they have met their UK tax obligations and whether they need to make a disclosure to HMRC for undeclared income and/or gains.

The Two ‘Nudge Letters’

The letters that will be sent to these offshore corporates will depend on their circumstances. Alongside these letters will be an ‘Certificate of Tax Position’ which is an investigative tool used by HMRC asking taxpayers whether they need to bring their tax affairs up to date or if they have correctly declared their income and gains. Tax advice should be sought before signing this declaration.

In terms of the letter:

  • The first letter will be issued to non-UK resident companies that own UK property and whether they need to disclose income as a non-resident landlord, or a liability to the Annual Tax on Enveloped Dwelling. This letter will also make recommendations that individuals who are subject to the Transfer of Asset Abroad legislation seek tax advice to ensure their UK tax obligations are up to date.
  • The second letter will be issues to non-resident companies that appear to have made a disposal of UK residential property between 6 April 2015 and 5 April 2019 and have not filed a Non-UK Resident Capital Gains Tax Return. We have previously written an article on non-UK residents and Capital Gains Tax which can be found here. It may also be the case that these non-UK resident companies could be liable for the taxes mentioned in the first letter. This letter recommends that these companies obtain tax advice on their position.

How we can help you

Even though the letter will be addressed to the company, the letter recommends that individuals connected with the company (e.g. shareholders) should also make sure that their personal tax affairs are up to date by seeking professional tax advice.

If HMRC have enquired into your tax affairs, we can support you throughout the process and interact with them on your behalf to ensure that your best interests are protected. Where you have previously unreported income or gains and are keen to settle your tax affairs, we can provide advice regarding the most appropriate way of disclosure, consider whether a disclosure can be made under HMRC’s campaigns, prepare the relevant documentation, and negotiate with HMRC to secure the best possible result for you.

If you have received a letter from HMRC under this campaign, please contact a member of our team.

Related Articles 

Register or Regret: The UK’s Register of Overseas Entities

Something to Gain - Capital Gains Tax for Non-UK Tax Residents and UK Property

 

Contact us today to discuss your tax requirements.
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