The tax amount depends on the property's value but businesses that meet certain conditions can apply for relief. This relief applies if the property is rented out commercially with the aim of making a profit. However, that relief cannot be claimed if the property is used by people linked to the company or those with an interest in it.
Also, ATED reliefs are not given automatically: they must be claimed each year in tax filings. As a result, it is suspected that some companies should be paying ATED but haven't properly reported it. HMRC has expressed the intention to continue to issue the letters over the next few months.
It has sent out four types of letters so far. Each letter is accompanied by an encompassing schedule that lists the information and documents HMRC expects in response. Companies that receive these letters should check their filings, fix any mistakes and follow the rules going forward.
Companies receiving these letters must act promptly. Or, if it has not submitted the required returns, it should do so immediately to avoid penalties. Companies must reply within 40 days of receiving the letter. If they don't, HMRC may issue a discovery assessment, estimating the tax due and possibly adding penalties and interest for late payment. The campaign shows HMRC is paying closer attention to tax relief claims for property businesses.
Companies that own UK residential property should review their tax filings to comply with the rules and avoid unexpected liabilities.
