You may have previously heard of HMRC’s ‘one to many’ letters, which are basically a string of campaigns aimed at catching taxpayers who may not have fully fulfilled their taxpaying obligations, intentional or not.
One of the latest campaigns has been compiled using Companies House data, and specifically the Persons of Significant Control (PSC) register. In simple terms, this data needs to be declared to Companies House where an individual or individuals hold a significant holding in a company.
What HMRC are doing is interrogating this register to find cases where people have ceased to be a PSC, or where their shareholding is recorded to have dropped in percentage terms. Where these individuals have not declared a capital gain on their 2019/20 tax return (which was filed by 31 January 2021), they will receive one of these letters suggesting that HMRC knows what you did last summer and they’d quite like their Capital Gains Tax (CGT) please. Copies of the letters can be found here.
Of course, not every share disposal requires notification on a tax return, if the values are small, and there may be no CGT due on a disposal if there is no gain, or if a relief has been claimed. However, in these cases the disposal should have been declared on a tax return and the relief claimed. Without a formal claim for relief, HMRC can simply demand the tax due, and there are statutory time limits for making such claims. The purpose of the letters is to prompt action before the window for amending the tax return closes on 31 January 2022.
If you do receive one of these letters and you are sure you have done everything that is required, you can breathe easy. If you aren’t 100% sure, drop one of our lovely team a line and we can help set you on the straight and narrow!
Contact Adam Keates, Senior Manager on adam.keates@claritastax.co.uk or Sarah Scala, Head of Tax Dispute Resolution on sarah.scala@claritastax.co.uk
