‘One to Many’ letters – update

HMRC has continued its approach of sending ‘One To Many’ (OTM) letters to individuals regarding entries included on their 2019/20 Self-Assessment tax returns, and has sent three new OTM letters to customers during November.

Disclosing sales of residential property

Sales of residential property which are not wholly covered by your Principal Private Residence (PPR) exemption are charged to Capital Gains Tax (CGT) at higher rates (18% and 28%) than sales of other assets (10% and 20%). HMRC is aware of taxpayers declaring sales of residential properties in the wrong box on Self-Assessment returns leading to the application of an incorrect (lower) rate of CGT.

If you made a taxable disposal of residential property during 2019/20 you must check that the disposals have been correctly declared as sales of residential property and correct any errors by submitting an amended return for the 2019/20 year before 31 January 2022.

Persons of Significant Control disposing of unlisted shares

Persons of Significant Control (PSCs) will ordinarily hold over 25% of shares or voting rights in a company, or have the right to remove the majority of a board of directors.

HMRC receives information about disposals of shares from Companies House, and in some cases the information HMRC receives does not match the information reported on a customer’s Self-Assessment tax return.

HMRC are writing to customers where it is aware that they have sold some or all their shares, but this has not been reported on their 2019/20 tax return. If you receive a letter you must check to confirm that all disposals of shares you made during 2019/20 are reported on your 2019/20 tax return, and make an amendment by 31 January 2022 to report and pay the CGT due on any previously undeclared disposals.

Partnership discrepancies

HMRC can review the Self-Assessment tax returns submitted by partnerships and the returns filed by each partner to ensure that each partner’s share of the partnership’s profits or losses is accurately reported.

HMRC is writing to customers who are linked to a partnership return but on their individual 2019/20 Self-Assessment return either have not declared any partnership income, or there is a discrepancy in the figures between the two returns.

If you receive a letter you must check that your share of your partnership’s profits or losses is accurately declared on your 2019/20 tax return and make an amendment by 31 January 2022 should the information be 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.