HMRC have provided the CIOT with information regarding an educational campaign that was commenced by their Wealthy and Mid-Sized Business Compliance Unit in March 2020. A letter was sent by HMRC on 12 March to a sample of taxpayers who subscribed for Venture Capital Trust (VCT) shares and claimed income tax relief on the subscription in their 2015/16 self-assessment (SA) tax returns. The letter provides information about their income tax obligations regarding VCTs and the circumstances in which the income tax relief given may need to be withdrawn. A copy of the letter was sent to the taxpayer’s agent where HMRC identified that the individual was represented by an agent.
HMRC are asking the individuals to complete a return form if they have sold any VCT shares acquired during the year ended 5 April 2016, and not previously notified HMRC about the sale, in order to give them the opportunity to bring their tax affairs up to date if the shares were sold within 5 years and income tax relief needs to be withdrawn.
In light of the current COVID-19 outbreak and the consequent difficulties in receiving and sending post, responses to the letter should be sent to HMRC by email to response.tldletter [at] hmrc.gov.uk.
A copy of the letter, the information sheet and return form are provided below. A copy of the agent cover letter is also provided.
HMRC have provided the CIOT with the following further information to help individuals who have received one of these letters,
“We know this is a difficult time for many of our customers and we continue to be here to support them. Anyone who is worried about a letter they have received and how they should respond can email us at response.tldletter [at] hmrc.gov.uk. HMRC continue to be available to deal with responses, queries and disclosures throughout this period”.
The letter asked for a response by 13 April 2020, but given the impact of the COVID-19 outbreak, HMRC have informed us that they have relaxed this deadline.
“The letters were issued before the sudden escalation in the Government’s response to COVID-19. We recognise the difficulties and uncertainties faced by individuals at this time and therefore we are no longer asking for responses to be provided by 13 April 2020. If individuals wish to make contact with us regarding their VCT investment, they can do so using the email address provided on the letter - response.tldletter [at] hmrc.gov.uk”.
In response to other questions raised by the CIOT about the letter, HMRC have responded as follows:
Q: There is no mention in the letter of penalties, or that if an error has been made it will likely be treated as a prompted disclosure, or that the taxpayer may wish to consider taking professional advice before responding to the letter, particularly if a disclosure needs to be made. Can this information be considered for inclusion in a future version of the letter, and in other similar educational campaign ('one to many') letters?
A: Thank you for your comments. We will consider penalties for inclusion in any future version of this letter. Customers are always advised to consult tax specialists on any areas of tax with which they are not familiar to ensure they are complying with their tax obligations. We will consider how best to incorporate this in future one to many letters where appropriate.
Q: The taxpayer is being asked to complete a form and sign a declaration stating 'I confirm that the information provided on this form is complete and accurate'. From conversations we have had with HMRC about other ‘one-to-many’ letters that ask the taxpayer to complete a certificate/form to disclose offshore income and gains, it is clear that the taxpayer is under no statutory obligation to complete and sign such a form and return it to HMRC. Indeed, the individual should consider very carefully whether to sign and return the form, given the consequences of an incorrect disclosure. Please would you confirm that you would accept a response by letter as an alternative should an individual choose not to complete the form?
A: We are happy to accept any disclosures or communication in a written form rather than completing the certificate that was issued with our letter.
Q: What follow-up action is being taken by HMRC if taxpayers do not respond to the letter?
A: We will contact customers if we require any further information.