HMRC offshore ownership campaign

Tax investigations frequently involve questions around property ownership, how a purchase was financed, or the capital gains tax (CGT) consequences of a disposal. The reporting of CGT is becoming ever more complex, and HMRC is aligning its investigations with new tax transparency rules, and the information available. Where properties are owned by offshore entities, recent developments such as ATED, the timing of CGT reporting, and changes to non-resident CGT have added complexity. International information exchange and tax transparency laws are also fuelling HMRC initiatives. The new Register of Overseas Entities rules require that any overseas entities that want to buy, sell, or transfer property or land in the UK must declare who their registrable beneficial owners or managing officers are. HMRC statistics show record CGT receipts and the new rules whereby taxpayers are penalised if they do not report and pay the tax within 60 days of selling UK residential property have added pressures.

It is therefore unsurprising that HMRC launched a campaign in late 2022 to tackle non-compliance linked to offshore corporates owning UK properties. The anticipated investigations will likely raise a wide range of tax issues, both for the offshore structures owning the properties, and for any UK taxpayers impacted.