Tax Disputes & Resolutions quarterly round up: July-September 2023

HMRC’s latest nudge letter campaigns

HMRC continues to widen its use of nudge letters. As the number of sources providing detailed financial information to HMRC increases, campaigns are becoming more specific and refined. The latest campaigns concern:

• Non-UK resident corporate landlords owning non-residential property in the UK.
• VAT errors arising from energy companies potentially not applying the correct legislation.
• Research and Development claims in the Nursing and Care Home sectors.
• Gift holdover relief claims made in 2021/22 tax returns.

You can read more about these letters here.

HMRC update – an insight into HMRC’s current priorities and strategies

Recently, HMRC has significantly increased its compliance activity to replenish the coffers following difficult times during the pandemic. Here, we provide our insight into the key areas that HMRC is targeting and their methods of doing so. Read more here.

HMRC’s interest in crypto investors

Many are unaware that crypto investments carry tax implications and can therefore be caught unaware by a ‘nudge letter’ from HMRC. The letter is sent to those taxpayers who HMRC believes need to review their tax affairs and respond accordingly. HMRC is able to send these letters based on information it holds, such as information on UK users from crypto exchanges. Read more here.

Capital Gains Tax (CGT) and divorcing couples podcast

Danielle Ford, Partner and Head of Tax Disputes & Resolutions, and Kay Mind, Private Client Director, featured on a family law podcast, discussing the implications of CGT for divorcing couples. Overall, the changes overall could be advantageous for both separating spouses/civil partners, and helps couples to plan the division of assets more effectively, during what is an emotionally challenging time. Listen here.

HMRC continues its focus on the football industry

Danielle Ford and Riocard Hoye, Senior Manager, contributed to HMRC’s Tax Investigations Enquiries and Powers magazine, discussing HMRC’s continued focus on the football industry and its use of Code of Practice (COP) 9 investigations. With transfer fees spiralling, the impact of any errors will be even more greatly magnified and we expect HMRC to continue to make challenges in this space. Read our recent update on this here.

Increased interest rates

From 22 August 2023, HMRC increased interest rates on late payments to 7.75%, with repayment supplements increased to 4.25%. This represents a rise of 0.25% for both late payments and repayments. HMRC says that the difference between rates compares favourably with commercial practice by other tax authorities globally.

Promoters could be criminalised

Tax avoidance promoters could be criminalised. The Government has issued draft legislation for consultation, prior to its intended inclusion in the Finance Bill 2023/24. It will mean promoters of tax avoidance schemes, who ignore HMRC stop notices, would face criminal charges and a potential two-year prison sentence. HMRC will also be given powers to bring disqualification action against directors of companies involved in promoting tax avoidance and those behind it.

HMRC is moving into the digital age

HMRC’s guidance states that it will accept digital or electronic signatures on 64-8 ‘authorising your agent’ forms. This includes scanned copies of 64-8s with handwritten signatures. Signatures signed on the screen of a digital device or displayed in a keyboard-typed font will be accepted however there are exceptions, including where HMRC has “legitimate reasons” to doubt that the taxpayer provided the signature. If the taxpayer does not place the signature onto the 64-8 form themselves, the form will be invalid.

We hope you enjoyed this edition of the Tax Disputes & Resolutions round up. You can read all of our previous insights here. If you would like further advice on anything mentioned above, or to discuss your circumstances in more detail, contact Danielle Ford, Partner & Head of Tax Disputes or Riocard Hoye, Senior Manager.