In recent weeks, it could be argued there have been one too many HMRC letters being sent to taxpayers.
HMRC is well-known for sending letters on a ‘one-to-many’ basis, a common process where HMRC sends one standard letter to many taxpayers. Through these letters HMRC is giving the taxpayers chance to review their UK tax returns and ensure that every part of their return is correct and complete.
I have summarised a list of recent ‘one-to-many’ letters which have been received by our clients in the last few weeks:
- Letters requesting individuals who were not previously domiciled in the UK under common law, but have become deemed UK domiciled for tax purposes under the legislation introduced in Finance Act 2017.
- Similar letters have been sent to individuals about their residence position for 2019-20.
- Letters to review overseas income and make good any missed tax.
- Letters concerning errors in the declaration of residential property disposals for capital gains tax.
- Omitted Capital Gains in respect of residential property which was not the taxpayer’s main home.
- Letters requesting a review of missed investment income from financial institutions.
- Letters in relation to benefit in kind discrepancies.
- Letters prompting the submission of possible late returns.
- Letters to individuals who are named as a Person of Significant Control of a mid-sized business.
What’s in the letters?
The letters use standard wording and inform the individual that it is their responsibility to tell HMRC about their UK tax liabilities and that it is important they check that they have declared all relevant tax liabilities.
The letters suggest seeking professional advice if the person is not sure whether they have declared all their tax affairs.
Where the taxpayer has an agent, a copy of the letter is sent to them.
Essential to check?
HMRC do carry out some risk assessment before sending a letter, so it is essential to check whether the individual’s tax affairs are correct and complete to the best of their knowledge and belief before responding to the letter.
Time to respond?
HMRC generally give 30 days to respond. Either the taxpayer has nothing further to report, or the taxpayer needs to follow the instructions in the letter on how to correct any errors.
If no disclosure is needed, the taxpayer does not need to take any further action. They may, however, consider sending HMRC an explanation by letter.
If a tax return(s) needs amending and if it is not possible to send the amendments within 30 days, the taxpayer or their agent should contact HMRC and agree a more reasonable timescale.
Where a response is required, but no response is received, HMRC will follow up so not responding at all will attract more attention from HMRC and possibly more penalties for our clients.
This article was written by Zahra Bharmal, a tax specialist at Price Bailey. If you have received letters and you need our assistance in responding to HMRC, you can contact Zahra Bharmal in our tax team using the form below.
We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.