The deadline for overseas entities which own UK property to register on the Register of Overseas Entities (“ROE”) passed on 31 January 2023 and, by the end of February, this information will be available to HMRC.
HMRC have made it clear that they intend to use this new information (no doubt as part of their Connect computer system) to investigate any arrangements which they suspect have failed to comply with their UK tax obligations. Their guidance confirms that, if a taxpayer thinks that they may not have paid the correct amount of tax in respect of a UK property, they should let HMRC know before 28 February 2023 that they intend to make a disclosure.
By notifying HMRC before they commence any investigation, it may be possible to reduce any penalties charged.
The penalties for not notifying HMRC of taxable offshore income, assets or activities are potentially severe and include, in the most serious of cases where the unpaid tax is more than £25,000, a custodial penalty of up to 51 weeks and an unlimited fine, even if there was no intent to evade tax.
The tax landscape for foreign owners of UK property has changed markedly and repeatedly in the last ten years so structures where advice has not been regularly updated over this period could find that they have become inadvertently non-compliant.
The deadline to notify HMRC of potential issues before it starts to launch its own investigations is fast approaching (28 February). If you think there is a chance that your structures are not compliant, please do get in touch with your usual Burges Salmon contact.
If you’re not sure the right amount of tax has been paid, you must come forward and tell HMRC as soon as possible. You should do this before 28 February 2023 and let HMRC know you intend to make a disclosure. If you do not come forward before that date, penalties may be higher.