HMRC One to Many Letter – Capital Gains Tax Incorporation Relief – Property Businesses
HMRC are commencing a One to Many (OTM) letter campaign in November 2023 which will target a small population of taxpayers who have incorporated their property business in the tax year 2017/18 but reported no Capital Gains Tax (CGT) liability on their Self Assessment tax return on the basis that incorporation relief under section 162 Taxation of Chargeable Gains Act 1992 applies in full.
The letter asks the taxpayer to check that they have correctly calculated the incorporation relief available to them, and refers to some specific technical areas that may be relevant with references to HMRC guidance. The letter suggests that they may need to seek professional advice if they are unsure. Care should be taken to ensure that the facts are correctly established and assessment time limits are considered.
If the taxpayer needs to disclose an error the letter asks them to submit a disclosure to HMRC using a dedicated email address provided in the letter.
If the taxpayer, after considering their position, believes that the information they have provided on their tax return is correct and that they do not need to make a disclosure, the letter asks them to let HMRC know by emailing another dedicated email address provided in the letter.
If HMRC do not receive a response within 30 days they will consider the case further and may decide to make a discovery assessment under section 29 Taxes Management Act (TMA) 1970, subject to statutory assessment time limits. They might decide to amend the claim under s9ZB TMA 1970, subject to the legislative criteria and time limit being met.
A copy of the letter is provided below.
CIOT members are reminded that they must comply with the fundamental principle of professional competence and due care as set out in Professional Conduct in Relation to Taxation (PCRT). This means that they should not undertake professional work which they are not competent to perform unless they obtain appropriate assistance from a suitably qualified specialist. Advice from another adviser specialising in tax disputes may therefore be needed if the member does not have the necessary expertise to handle a disclosure or HMRC investigation themselves.