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Incorporation Relief Letter from HMRC – Capital Gains Tax for Property Businesses

Published by Chirag,
Posted Date: November 17, 2023 , Modified Date: April 22, 2024

HMRC has initiated a focused One to Many (OTM) letter campaign, commencing in November 2023, targeting a specific group of taxpayers.

These individuals, who incorporated their property business during the tax year 2017/18, reported no Capital Gains Tax (CGT) liability on their Self Assessment tax return, citing an incorporation relief letter under section 162 of the Taxation of Chargeable Gains Act 1992.

Recipients of this letter are urged to verify the accuracy of their Incorporation Relief calculations. The correspondence highlights certain technical aspects relevant to incorporation relief and provides references to HMRC guidance.

If uncertainty arises, the letter advises seeking professional advice. It is crucial to ensure the accuracy of facts and consider assessment time limits.

incorporation relief letter

Should an error be identified, the letter instructs the taxpayer to make a disclosure to HMRC using a dedicated email address provided in the letter.

Alternatively, if the taxpayer believes that the information in their tax return is accurate and no disclosure is necessary, they are encouraged to inform HMRC by emailing another dedicated address included in the letter.

Failure to respond within 30 days prompts HMRC to review the case further. They may opt to issue a discovery assessment under section 29 of the Taxes Management Act (TMA) 1970, subject to statutory assessment time limits.

Additionally, they might consider amending the claim under s9ZB TMA 1970, provided the legislative criteria and time limit are met.

While the letter specifically references the tax year 2017/18, it emphasises that other years may undergo scrutiny depending on the incorporation's specific tax year.

incorporation relief letter

Members of CIOT are reminded of their obligation to adhere to the fundamental principle of professional competence and due care outlined in Professional Conduct in Relation to Taxation (PCRT).

This implies refraining from undertaking professional work beyond one's competence unless assistance is sought from a suitably qualified specialist. In handling disclosures or HMRC investigations, members may need advice from a tax disputes specialist if they lack the necessary expertise.

To Wrap Up!

In summary, the Incorporation Relief Letter from HMRC targeting CGT for property businesses underscores the importance of accurate calculations, seeking professional advice when needed, and complying with HMRC disclosure procedures to avoid potential assessments and amendments.

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