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UK: Residential property owned by foreign landlords, HMRC compliance project

UK: Residential property owned by foreign landlords

Letters are being sent to tenants occupying UK residential property owned by non-resident corporate landlords. The letters are in the form of a four-page questionnaire.

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If no reply is received to the letter, HM Revenue & Customs (HMRC) will register the property for the “annual tax on enveloped dwellings” (ATED) and issue a tax determination to the offshore landlord.
 

Summary

HMRC’s goal is to establish whether rental income paid in respect of UK property that is owned by foreign owners has been or is correctly declared.

The four-page questionnaire asks for various details including (1) the name of the tenant, (2) the identity of the landlord/owner, (3) rent paid, (4) the date the property was acquired, (5) the name and address of the trust if owned by a trust, (6) the name and address of the settlor, and (7) a copy of the trust deed if held.


Possible options

Owners need to consider communicating with their agents or tenants that might be in receipt of the HMRC letters. Further in responding to the HMRC’s letter, owners may need to consider whether there are any broader tax risks associated with the structure that may require disclosure or amendment that could lead to failure to correct penalties (that start at 100% of the tax).
 

Read a November 2019 report prepared by the KPMG member firm in the UK

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