HMRC has used Land Registry and other data to identify non-resident corporate owners of UK property that may not have met their UK tax obligations. It will be sending one of two ‘nudge’ letters to identified corporate property owners, together with a Certificate of Tax Position. 

HMRC sends ‘nudge’ letters to taxpayers whose tax affairs it suspects may not be fully in order. A nudge letter gives a taxpayer the opportunity to engage with HMRC and remedy defects before an official enquiry into their tax affairs is launched.

One nudge letter will be issued to non-resident companies owning property in the UK that may not have disclosed income received or a liability to the Annual Tax on Enveloped Dwellings (ATED).

Although the letter will be addressed to the corporate entity, it will recommend that connected UK residents ensure their personal tax affairs are up to date in relation to anti-avoidance provisions. The letter will recommend UK-resident individuals who may fall within the Transfer of Assets Abroad (ToAA) legislation to seek professional advice to make sure their affairs are in order.

The other letter will be sent to non-resident companies that appear to have disposed of a UK residential property between 6 April 2015 and 5 April 2019 without filing a Non-Resident Capital Gains Tax (NRCGT) return.

HMRC usually issues nudge letters where it has grounds to suspect a company or individual’s tax affairs may not be in order. It is unwise to ignore such letters. If you receive one, we highly recommend you contact us as soon as possible. An early response to HMRC may reduce the likelihood of HMRC escalating matters without giving you the opportunity to resolve them.

The above is general advice concerning HMRC nudge letters. If you have any queries about this topic, please contact Jill Springbett at jill.springbett@mgr.co.uk

Warning: The above is merely general guidance and should not be relied upon as formal advice. The advice we give to each client will depend on their specific circumstances. We suggest you take professional advice before taking any action in relation to the issues discussed above.