Let’s go round again

First the Average White Band, then Take That, and now its HMRC hoping to turn back the tax records of time by recycling a tactic previously used.
Metaphor suitably tortured, the story is that, as publicised on the Chartered Institute of Tax website, HMRC are in the process of sending a ‘one to many’ letter to individuals identified as ‘Persons of Significant Control’ within Companies House records, but who either didn’t file a tax return in 2021/22 tax year or whose income declared on that return was “lower compared to most in a similar position”.
That’s a bit vaguer than the basis of a similar letter sent last Autumn, which we reported in our blog at the time, targeting those identified as PSC’s but with income levels below £100,000.
It isn’t clear whether £100,000 is still the benchmark or whether HMRC have aligned their expectations to a more realistic level of average earnings. But the use of the letters suggests that last Autumn’s process was sufficiently profitable for HMRC to give it another go this year.
It feels surprising that this particular tactic would yield significant tax take. Those who have diligently registered as PSCs might be expected to be already compliant business persons who take their tax filings seriously. And the law of diminishing returns would be expected to result in fewer and fewer errant taxpayers being flushed out of basically the same data set year after year.
Possibly it’s increasing media and public hunger for HMRC to be seen to be acting on beneficial ownership information that is driving this campaign, rather than results from last year’s cycle. There’s certainly a lot of pressure from those arenas for HMRC to pursue information connected with the register of overseas entities.
Whatever the motivation, those in receipt of a letter from HMRC under this campaign or for some other reason would be well advised to take it seriously and to seek professional input before deciding if and how to respond.

The next step

To find out more about how this issue might affect you, get in touch with Graham Boar at the Letchworth office or your usual UHY contact.

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