HMRC are in the process of contacting corporate owners of UK residential property to remind them of their ATED (Annual Tax on Enveloped Dwellings) filing obligations.
ATED has been around since 1 April 2013 and all companies (whether UK or not) holding UK residential property valued at over £500,000 are within scope for ATED and required to file an ATED return by 30 April each year.
The vast majority of companies which are within the scope of ATED are subject to a relief (rental relief being by far the most common) but a relief return still needs to be filed each year in order to claim the ATED relief.
HMRC's latest statistics on ATED show that of all the ATED returns submitted in 2018/19 over 75% were relief returns with 19,670 relief returns being submitted compared with just 6,330 chargeable returns.
If a company has not filed returns historically to claim a relief then although no ATED may be due, late filing penalties can build up. Late filing penalties can be up to £1,600 per year missed, unless HMRC believe the failure is deliberate in which case the penalties can be higher.
One would expect that continuing failure to file a return after receipt of a nudge letter is likely to be looked upon as a "deliberate" failure to comply by HMRC unless there are mitigating circumstances. As a result, recipients of these nudge letters would be best advised to consider and (if necessary) correct their ATED position sooner rather than later.
(HMRC ATED statistics are available at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/875784/ATED_1819_Commentary.pdf)
HMRC letter to Annual Tax on Enveloped Dwellings (ATED): non-filers By Technical Team on 16 Oct 2020 HMRC’s Wealthy External Forum have issued a briefing to forum members regarding a letter to be sent to corporates who appear to have purchased a dwelling/residential property worth £500,000 or more from 1 April 2020 and have not filed an ATED return. It is proposed that the letter will be sent to corporates in October 2020. However, HMRC note the dates that letters are to be issued may be subject to change. Briefing dated 13 October 2020Letter to ATED non-filers