Offshore Corporates Owning UK Property – HMRC letter campaign and Guidance for CIOT members
HMRC have told the CIOT that they will be launching a new campaign in November 2022 to tackle non-compliance linked to offshore corporates owning UK property. The CIOT has issued guidance to assist members in deciding the most appropriate way to respond if a member’s client receives one of these letters from HMRC.
A copy of the CIOT’s guidance together with copies of HMRC’s letters can be found at the foot of this page.
HMRC reviewed data, including from the Land Registry. They identified non-resident corporate owners of UK property that may not have met certain UK tax obligations. Depending on the circumstances, HMRC may issue one of two letters. The letters will be accompanied by a Certificate of Tax Position and a Notice of Intention to Disclose. While the letters are addressed to the corporates, both also recommend that the companies should ask connected UK-resident individuals to ensure their personal tax affairs are up to date in respect of the related anti-avoidance provisions.
One letter will be issued to non-resident companies that own UK property and may need to disclose income received as a non-resident corporate landlord or a liability to the Annual Tax on Enveloped Dwellings (ATED). Under the Transfer of Assets Abroad (ToAA) legislation, UK-resident individuals who have any interest in the income or capital of a non-resident landlord, whether directly or indirectly, may be within the ToAA income charge provisions at s721 and s727 ITA 2007. A UK resident who has not personally transferred assets but benefits from a transfer made by somebody else (e.g., occupation of property) may be within the ToAA benefits charge at s731 ITA 2007. The letter recommends that any such individuals should seek professional advice to ensure their affairs are up to date.
The other letter will be issued to non-resident companies that appear to have made a disposal of UK residential property between 6 April 2015 and 5 April 2019 without filing a Non-Resident Capital Gains Tax (NRCGT) return. Between 6 April 2015 and 5 April 2019, disposals of UK residential property by non-resident companies were subject to NRCGT. Where the company purchased the property before April 2015 and the whole of any overall gain is not charged to NRCGT (or otherwise), then that part of any gain not charged may be attributable to the participators in the company under s13 TCGA 1992 (these rules have since been relocated to s3 TCGA 1992). Additionally, such corporates may also be liable to pay UK tax on rental profits, income tax under the transactions in land rules and/or ATED. Again, the letter suggests that any individual participators should seek professional advice to ensure their affairs are up to date.
HMRC have provided the following details about the numbers of letters associated with this campaign.
- The letter to non-resident companies that own UK property and may need to disclose income received as a non-resident corporate landlord or a liability to ATED (ATED/NRL non-filers) – they expect more than 4,000 of these letters to be sent.
- The letter to non-resident companies that appear to have made a disposal of UK residential property between 6 April 2015 and 5 April 2019 without filing a NRCGT return (NRCGT non-filers) – they expect more than 1,500 of these letters to be sent.
Disclosure for ATED & non-resident corporate landlord liabilities – letter
Disposal by non-resident company of interest in UK residential property – letter