HMRC One to Many letter – Inferred Distributions
HMRC have advised us that they have commenced a One to Many letter campaign directed at taxpayers who HMRC suspect may need to declare income from distributions or dividends. HMRC have looked at company accounts and are contacting taxpayers where they have identified a large drop in profit and loss account reserves which indicates they may have received a distribution or dividend from the company but not declared it on their self assessment tax return. The letter provides 30 days for the taxpayer to respond. If on reviewing their tax return, they decide that they need to declare some income the letter directs them to HMRC’s GOV.UK guidance on making a disclosure. If they believe that they have no income to declare, the letter asks them to let HMRC know either by telephone or by email, again within 30 days. If they do not respond, the letter says that HMRC may open a compliance check and charge higher penalties. Further information about penalties and interest is provided. The letter is being copied to authorised agents.
The letter sending process commenced on 5 February 2024. A copy of the letter is provided below.