Offshore Corporates owning UK Property

HMRC launched a new campaign from last month, to target offshore companies’ non-compliance linked to owning UK property. Reports from The Chartered Institute of Taxation (CIOT) states that this campaign follows a specific review of data that identifies; non-resident, corporate owners of UK property failing to comply with UK tax obligations.

What’s happening

HMRC have reviewed data, including from the Land Registry and they identified non-resident corporate owners of UK property that may not have met certain UK tax obligations.

HMRC are issuing letters to non-resident companies that have failed to file either non-resident landlord returns, Annual Tax on Enveloped Dwellings (ATED) or Non-Resident Capital Gains Tax (NRCGT) returns. Companies failing to file non-resident landlord returns or ATED return shall receive a letter requesting Certificate of Tax Position and a Notice of Intention to Disclose.

Requirements for non-residential landlords

Non-resident companies receiving rental income from UK property are required to report the income and pay corresponding tax to HMRC. The income is reported via corporation tax return CT600 rather than SA700 forms required previously.

Annual Tax on Enveloped Dwellings (ATED)

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 ATED.

Non-resident companies are also required to file ATED returns and pay an ATED charge where the dwelling owned is valued more than £500,000. Returns need to be submitted between 1 April and 30 April in a chargeable period.

Furthermore, 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. 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 also within the ToAA benefits charge.

Non-Resident Capital Gains Tax

Non-resident companies were required to file a NRCGT return for disposals of UK residential property between 6 April 2015 and 5 April 2019. HMRC has noted several non-resident companies have not filed their NRCGT returns for property disposals in the aforementioned period.

The letter issued by HMRC suggests that any individual participators should seek professional advice to ensure their affairs are up to date.

What do I do now?

Although there is no statutory requirement to complete a Certificate of Tax Position or Intention to Disclose, these cannot be ignored as HMRC is likely to open its investigations. Therefore, it is essential appropriate specialist advice is sought on how to respond.

Beneficial owners, shareholders and directors of these companies also need to review their tax position and bring their tax affairs up to date.

Disclosure needs to be made within the 40 day period specified in the letter.

How can we help?

Our tax specialist team can guide you through the disclosure process. We can review your tax affairs and bring these up to date. We can prepare and submit a disclosure on your behalf that minimizes your cost relating to unpaid tax, late interest, and any penalties.

For more information and guidance on this, find out more about our Tax Services Team here and how they can help you get ready, or call them on 01293 227670.