For many taxpayers, a brown envelope from HMRC will not be well received at any time of the year. Odds on it will contain bad news. It may be the start of an investigation. It may be a “nudge letter” or a “Check on tax position”. It almost certainly won’t be a Christmas card!
HMRC are pretty good at grabbing people’s attention by using such headings in their letters to taxpayers. Such letters are often effective because their “intelligence sources” are pretty accurate. I have seen letters in the past where HMRC have even quoted bank account numbers from the outset just to demonstrate how much detail they had at the time. All targeting offshore income and gains.
They say that a little knowledge can be dangerous. Likewise, being self taught off the internet can cause unexpected tax problems. A lot of taxpayers around the work want to be able to say “it’s tax free”.
Two taxpayers in business together almost came a cropper with HMRC. HMRC raised a valid enquiry into their personal tax affairs issuing Code of Practice 9 (Cases of suspected serious fraud). All perfectly normal – in my world anyway! My clients had ignored my warning – don’t underestimate the ingenuity of HMRC
In March 2021, another round of nudge letters have been issued. This time they are following up on the information they have been supplied under the Common Reporting Standard (CRS). Other than saying “we have information … … …”, HMRC don’t tell you what they know or rather suspect. Yes HMRC has information on overseas assets – but is simple ownership leading to a tax liability?
HMRC are seeking Annual Tax on Enveloped Dwellings (ATED) charges from Non Natural Persons or typically offshore structures such as companies and trusts. ATED returns are required even if the taxpayer wishes to claim an exemption from the tax charge.