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.
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.
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.
NRE PIS account opened after months of to and fro.
Client wanted to transfer shares held in NRO account to NRE account but due to lack of clear rules, this project was abandoned.
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.
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.
Penalty calculation – India is not on the list thus falls in the residual category 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.