Last updated: 22 Jul 2024 12:00 Posted in:
HMRC is writing to persons with significant control (PSC) who have not filed a tax return or may not have declared all their income.
Under PSC rules, a company must identify every individual who can control it, and to report this information to Companies House. HMRC has reviewed this information and is writing to the PSC where it believes that that person may need to take action.
The tax authority has to date issued two types of letter.
The first requests that the PSC to check their tax return for 2022/23 and to correct any errors by 23 August 2024. The letter includes guidance on how to do this. The person is also encouraged to make sure that their tax return for 2023/24 includes all sources of income and gains.
While it says the letter “isn’t a formal compliance check”, it also states: “It’s your responsibility to make sure your tax return is complete and correct. We may find errors that you should have corrected after receiving this letter but didn’t. If so, we may open a compliance check and investigate. This may mean that you have more tax to pay. We may also charge you a penalty. We will also charge interest on late payments.”
The second letter is aimed at PSCs who have not submitted a tax return. The PSC is asked to check whether they need to register to submit a return. If a return should have been submitted for 2022/23, they should register and submit the return by 23 August 2024. However, if they fail to do this, HMRC may charge a failure to notify penalty. The individual concerned should contact HMRC using the contact details given in the letter if they do not believe a return is required.
The letters explain that, if HMRC discovers an error in a submitted return, or that a return should have been submitted, it may open a compliance check.
Where a return has not been submitted, HMRC has the option of raising a determination. This allows it to estimate the amount of tax due and to collect that amount.
The letters outlines examples of circumstances in which a PSC may receive income or benefits from a company for tax purposes. These include where the company pays the individual’s personal costs; where the individual receives a loan from the company and does not repay it; and where the individual uses the company’s assets free of charge.
A PSC is a person who directly or indirectly owns more than 25% of the shares in a company; directly or indirectly holds more than 25% of the voting power of a company; has the right to appoint or remove the majority of directors of a company; or can exercise significant influence over the company.
