One to Many letters – latest updates

HMRC have recently sent ‘One To Many’ (OTM) letters to individuals regarding entries included on their 2019/20 Self-Assessment tax returns.

The OTM approach is where HMRC send one standard message to many customers i.e. taxpayers. The aim is to influence a large group of customers’ behaviours, so they are more likely to comply with their tax obligations. An OTM approach is not a formal compliance check.

Pay and Tax/Benefit in Kind discrepancies

HMRC receives information about employment income and benefits in kind from employers and in some cases the information they provide does not match the information that is declared on a customer’s Self-Assessment tax return.

HMRC are writing to customers regarding P11D and P14 submissions where the information declared does not match that of the individuals 2019/20 tax return. If you receive a letter you must check your income and benefits declared on your tax return and make an amendment should the information be incorrect.

Where an agent receives a letter on your behalf HMRC may invite them to speak with them regarding the matter.

Remittance Basic Charge

Currently a UK resident taxpayer who is non UK domiciled can claim to be taxed on the remittance basis of taxation, this means that they are subject to UK tax on their UK sourced income and gains as well as only foreign income and gains that are remitted to the UK.

The alternative is to be taxed on the arising basis meaning worldwide income and gains are taxable and remittances are not declared. If an individual is UK resident for at least 7 of the previous 9 years, they are subject to a remittance basis charge (RBC) as well as the tax due on remittances brought in to the UK. RBC’s start at £30,000 and can be as high as £60,000 if an individual is UK resident for at least 12 of the previous 14 years.

HMRC are writing to individuals they believe to be UK resident for at least 7 years prior to the 2019/20 tax year and who have claimed to be taxed on the remittance basis but have not paid a RBC on their tax return.

The letter asks the taxpayer to look at their return and compare it to the details held in the letter, to check the guidance and obtain their agent’s advice (if they have one) and to act now and correct the error.

The choice is to ensure a RBC is included on their return or switch to the arising basis of taxation which means worldwide income and gains are to be included. If the taxpayer believes their return is correct they must contact HMRC to confirm this.

HMRC can open an investigation to check the level of foreign income and gains declared on a tax return if they believe the income and gains declared are incorrect.

Action to take

With any OTM letter received, it is important to check the information declared to HMRC and to ensure it is correct. The letter will give advice on the next steps to take but we would recommend you seek professional help from a tax advisor.

Should you wish to contact HMRC regarding the OTM letters you can email WealthyOTM@hmrc.gov.uk.

Contact us

For further advice, please contact us at advice@taitwalker.co.uk.