ATED: Bare Trust: NRLS


A client owned a property in London via off-shore company.

On the first glance it seems it falls under ATED but as per HMRC ATED technical guidance, Page 4 : example 2. Quoted below:

Example two: B Ltd is acting as a bare trustee for Mr Y and it holds the legal title to a dwelling worth £15 million. The beneficial interest in the dwelling is held by Mr Y personally. Despite B Ltd owning the legal title to the dwelling it does not own the beneficial interest. B Ltd does not therefore meet the ownership condition and is under no obligation to (and should not) send in returns

Client came under this scenario thus was not covered by ATED.


  1. a) ATED Technical guidance

2. It is well settled under English law that a trust does not need to be in writing and may be made orally. Source : Lily Tang Vs HMRC 2019 UKFTT 81 but in the case of land , the trust needs to be evidenced in writing under S53(1)(b) Law of Property Act 1925.


Same client planned to let this property out on rent. There was confusion as to which form to complete, we called HMRC and they advised that as the legal owner is the company we should complete form NRL2.

We made an application but HMRC sent us a letter back asking us to complete NRL 3 for trusts as there is a bare trust involved.

We conclude that HMRC second advice asking us to complete NRL3 is correct as a trust is involved bare or any other type.

Thank you HMRC for all the guidance.

HMRC is in our opinion is one of the best tax collecting institutions in the world.


Incentive for manufacturers in UK

UK government does not support its manufacturing and farming industries like other countries.

Current incentives are listed below:

  1. Super deduction

Companies that incur qualifying expenditures between 1 April 2021 to 31 March 2023, can claim:

  • a super-deduction allowance of 130% on most new plant and machinery investments that ordinarily qualify for 18% main rate writing down allowances
  • a first-year allowance of 50% on most new plant and machinery investments that ordinarily qualify for 6% special rate writing down allowances

Thus, super-deduction of 130% will provide a deduction exceeding the cost of the asset and first year deduction of 50% will accelerate allowances.


  1. Used and second hand will not qualify.
  2. Expenditures on contracts entered into prior to 3 March 2021 even if expenditures are incurred after 1 April 2021. 
  3. Plant and machinery expenditure which is incurred under a Hire Purchase or similar contract must meet additional conditions to qualify


ACCA guidance

2. Research & Development

This is more difficult to qualify but has higher rewards. If a company incurs expenditure to make an advance in science or technology, it can claim R&D relief:

  • deduct an extra 130% of their qualifying costs from their yearly profit, as well as the normal 100% deduction, to make a total 230% deduction
  • claim a tax credit if the company is loss making, worth up to 14.5% of the surrenderable loss


3. Government support directory

UK Government has made a helpful directory where businesses can find funding in shape of grants, equity and debt. Access it via link

4. Local chamber of commerce

One can join local chamber of commerce to meet similar businesses and share ideas and contacts.

Remittance out of India

There are two main types of accounts in India. NRE and NRO both are maintained in INR.

PurposeFor sending monies to India from another countryFor funds generated in India like rental income
RepatriationFully repatriable i.e. all funds in this account can be sent out of India without any restrictions.Repatriation limit of USD one million per financial year.   Plus, paperwork needs to be completed before sending funds out of India.1
  • 1. Paperwork required:
    • Form A2  – Funds transfer form
    • Form 15CB – Chartered Accountant certificate
    • Form 15 CA – Self declaration

A useful blog I found on this subject.

August 2021

Recently a client wished to invest funds in the Indian stock market and he contacted his old bank where he had a dormant account, after lot of paperwork and telephone calls finally the bank was able to activated NRO accounts and client started sending funds to India in his NRO account.

We realised that this is not the optimum solution for the client as he is sending his overseas earnings to India and will face restrictions in the future if funds are sent via NRO account, see above for restrictions.

We have requested the banker to change the arrangement to NRE account, let see how things turn up.

November 2021

NRE PIS account opened after months of to and fro.

December 2021

Client wanted to transfer shares held in NRO account to NRE account but due to lack of clear rules, this project was abandoned.

HMRC Worldwide Disclosure Facility – India

Step by Step Guide


If you received a HMRC letter about your money or assets abroad and after having checked your tax affairs you find that you need to make a disclosure – you will  need to use this facility.

Step 1 – Where possible, contact HMRC. They may give you more information about the assets in question, which will help focus the review of tax affairs. However, there’s no guarantee they’ll share anything with you.

Step 2 – Send the certificate back to HMRC after ticking box 1.

Please note this is a important step because if the statement turns out to be false this could expose the tax payer to criminal investigation and prosecution.

Step 3 – Register for the Digital Disclosure Service (DDS).
Please note 90 day time period starts from the date you notify HMRC using DDS not from the date you sent the certificate back mentioned in Step 2.

Step 4 – We have now 90 days to:

  • Gather the information to fill in the disclosure
  • Calculate the final liabilities including tax, duty, interest and penalties on a year by year basis.
  • Fill in the disclosure, using the unique disclosure reference number (DRN) given on notification
  • Gather information on maximum value of overseas assets you have in the past 5 years

Complete and true – Disclosure should be complete and full co-operation needs to be given to HMRC

Number of years– Taxpayer will also need to self-assess their own behaviour, based on this assessment, tax payer will be presented with the number of years disclosure needs to be made.

12 yearsNon-deliberate (see below bonus point 2)
up to 20 Dishonest behaviour

This will also have an effect on the quantum of penalty to be charged.

See Example of Offshore Penalty Calculation

Tax Calculation – We need to be aware of the effect of Double Taxation Agreements for this DTAA Digest and HS 263 will come handy.

Step 5 – It’s a condition of using this facility that we make an offer for the full amount of taxes, duties, interest and penalties owed.

We must make full payment in accordance with the disclosure on the same date that the disclosure is submitted.

We will get an acknowledgement from HMRC within 15 days of them getting the completed disclosure. They will aim to tell us of the intended course of action within 90 days of the acknowledgement.


  1. Penalty calculation – India is not on the list thus falls in the residual category 2.
  2. Time period for offshore assessments was changed in 2019. This override RTC Regulations. Earliest year for if reasonable care taken is 2013/14. If behavior careless earliest year is 2011/12. These time periods will change on 6th April 2021.
  3. Penalty Suspension – Penalty for the year 2016 to 2017 and later years can be requested to be suspended refer Testa v HMRC FTT (TC 2549) , [2013] SFTD 723


HMRC Guidance

Further readings:

  1. Taxation of Interest Income from NRE / FCNR Deposits.
  2. Taxation of LIC Policy in UK.

Overview of taxes in United Kingdom

Below is a very brief summary of taxes in the UK but gives an idea to a businessman who is planning to start a business.

Ongoing Taxes

Corporation taxTax on profit the company makesCurrent rate 19% going up to 25% from April 2023 for profits over £250k
Dividend taxTax on dividends received by individual shareholdersFirst £2k tax free then between 7.5% to 38.1%
Payroll (PAYE) tax    Taxes on becoming an employer 
Income taxEmployee paysFirst £12,570 is tax free then between 20% to 45%.
Employee national insuranceEmployee paysFirst £8,840 tax free then 12%
Employer national insuranceEmployer paysFirst 9,568 tax free then 13.8%.

Employment allowance £4k
Value added taxSales tax when turnover crosses £85,000Usually 20%
Business rates          Municipal taxUsually, half of rent

One off taxes

Capital Gains TaxTax on the profit when you sell something that is increased in value.First £12,300 tax free then 10% or 20% depending on your income. Tax on sale of residential property is higher.
Inheritance TaxTax on the estate of someone who died.40% over £325,000

Other matters

InsuranceMinimum legal requirementEmployer’s Liability Insurance.   Certificate needs to be kept for 40 years.
Minimum WageLegal minimum wageOver 23 years: £8.91 per hour. Lower for younger people

Matters specific to restaurant industry.  

Premises LicensePermit to sell alcoholNew license can be a long process. Transfer is usually free and annual fee less than £1k p.a.
Music LicensePermit to play background musicAnnual fee under £1k p.a.


Suppose you start a restaurant and after few years it starts making some profits, you will find that you have a new partner to share in your good fortune – Her Majesty’s Revenue and Customs (HMRC)

I have given below what an owner will make and what his new partner HMRC will capture.

Owner’s share:
Sales                                                   £2,000,000
Net Profits                                        £400,000             say 20%              
Corporation Tax                              £100,000             25% rate from April 2023
Distributable Profits                       £300,000
Personal/Dividend tax                   £100,000            
Net in hand                                      £200,000

I have taken net profits at 20% this is achievable in a well-run high end central London restaurant. This profit percentage is after paying payroll taxes, VAT and Business Rates.

HMRC’s share:
Business Rate                                   £100,000             Fixed not dependent on sales
VAT                                                     £400,000            
Payroll Taxes                                    £60,000              
Corporation Tax                              £100,000            
Personal/Dividend tax                   £100,000            
Total                                                   £760,000

Above figures have been estimated and rounded off to make them easier to understand but on the whole close to reality.

In case you decide sell or just drop dead, you will meet new characters from the `Book of the Taxes` called Capital Gains tax and Inheritance tax but don’t worry, not today.

Set up a business – GOV.UK (