HMRC has commenced a campaign with a series of “One to Many” letters aimed at non-UK companies that own UK residential properties valued at over £500,000 and have reported consecutive losses on self-assessment returns for the 2017/18 to 2019/20 tax years (inclusive).  From April 2020 onwards, non-UK resident companies renting out UK property have been required to report any profits or losses via the corporation tax, rather than the income tax, system.

The letters are both aimed at companies who have claimed rental business relief, and those that may not have filed ATED returns at all. These encourage any corrective filing to take place, and any outstanding payments of ATED to be made.

HMRC highlight that to qualify for rental business relief, the business should be run on a “commercial basis” and “with a view to profit” and if the company has consistently reported losses on its self-assessment returns, then it may not meet the conditions to qualify for relief.  HMRC is also reminding companies that if properties have been occupied by “non-qualifying individuals” (broadly, these are individuals closely connected to the company), then rental business relief will be restricted or denied in full.  

More detail regarding these letters, including templates of the letters themselves, has been released by the Chartered Institute of Taxation, and can be found here: HMRC One to Many letters - ATED Avoidance Qualifying Property Business Relief

Companies receiving these letters should take action as soon as possible.  We have considerable experience in a number of different areas of the ATED regime and are able to assist should any advice be required, or if assistance with corrective ATED reporting is needed.

We will also shortly be releasing an article which is a “deeper dive” into the ATED regime, including points surrounding qualifying rental businesses.