HMRC are sending letters to individuals who are named as a Person of Significant Control (PSC) of a company registered at Companies House. These letters have been issued to a large number of taxpayers and are being sent directly to individuals and/or separate letters to their agent, where the taxpayer is represented.
The letters have been issued during October and November 2021 and will state that the intention is ‘to help make sure that your return is complete and correct’. The letters will highlight some common errors and invite taxpayers to review their tax affairs and, if necessary, amend their 2019/20 tax return before the deadline of 31 January 2022.
These letters are not an indication that anything is wrong with your tax return and are not a compliance check or enquiry, however HMRC could deem this to be a prompt should a disclosure be required in the future and any additional tax liabilities as a result of the disclosure could be subject to significant penalties.
To be a PSC you must:
- Hold more than 25% of shares or voting rights in a company
- Have the right to employ or remove most of the board of directors
- Have significant influence or control in a company
The letter will also state that the PSC should be aware that there may be tax consequences as an individual if they:
- Use the company to pay for personal costs
- Have the use of business assets
- Transfer assets to or from the company
- Receive loans and do not pay interest at an official rate
- Receive loans which are not paid off
- Take up an option to buy shares
- Take value from the company
If you receive one of these letters and are happy that your tax return is correct, then you do not need to do anything. However, if you are concerned that your tax returns may be incomplete or would simply like a review to provide you with peace of mind that your tax affairs are in order, please do not hesitate to contact Carol Edwards or any member of our Tax Investigations Team.