Pictured: James R Rose MMath(Hons) FCA CTA
In one of its latest round of ‘one-to-many’ so-called ‘nudge’ letters, HM Revenue & Customs (HMRC) is writing to certain individuals who it has identified as having significant control over a company, to check if they have declared all of their income and gains for the tax year ending 5 April 2024.
The persons with significant control (PSC) rules are enforced by Companies House and require a company to identify all of the people who can control it, and to report this information to Companies House. Broadly, a person is a PSC in respect of a company if they:
• directly or indirectly own more than 25% of the shares or voting rights in the company;
• have the right to appoint or remove the majority of directors of the company; or
• can exercise significant influence over the company.
A PSC may have taxable income and gains to declare as result of their relationship with the company. For example, depending on the circumstances, this could be the case where the PSC:
• receives dividends from the company;
• has the company meet their personal costs;
• has the use of company assets;
• transfers personal assets to the company, or vice versa;
• receives loans from the company;
• takes up an option to buy shares in the company; or
• sells shares in the company.
As part of its continued drive to analyse information from other organisations to try to improve taxpayers’ compliance with reporting requirements, HMRC has reviewed the information held by Companies House and is sending one of two letters to certain PSCs, where HMRC believes that the person may need to take action and where they believe tax might have been underpaid and/or income and gains not appropriately disclosed. The letters are not a formal compliance check but more a ‘nudge’ to those identified that they may need to bring their tax affairs up to date.
The first letter asks the PSC to check their Tax Return for the year ended 5 April 2024 and to correct any errors. The PSC is also encouraged to make sure that their Tax Return for the year ended 5 April 2025 includes all sources of income and gains. The second letter is aimed at PSCs who have not submitted a Tax Return for 2023/24. The PSC is asked to check if they should have submitted a Return and if so, to register for self-assessment and submit a Return. The PSC should contact HMRC using the contact details given in the letter if they do not believe a Return is required.
We can assist you with taking appropriate action in these circumstances, so if you believe you may not have fully declared your income and gains to HMRC, please contact us for advice.
The above is for general guidance only and no action should be taken without obtaining specific advice.
If you are looking to trim your tax, it pays to get professional advice.
Pearson May specialise in a full range of accountancy services to help you maximise your profits and minimise the tax you have to pay.
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Pearson May Chartered Accountants & Chartered Tax Advisers
Bath, Trowbridge and Chippenham
pearsonmay.co.uk
