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Living overseas and managing a let property in the UK is never easy, but HMRC has just made the task a little more difficult by sending disturbing letters to overseas landlords and to their tenants.

The letters are targeted at landlords who hold the property through a corporate structure or a trust. HMRC has been reminding the landlord that it may need to pay the Annual Tax on Enveloped Dwellings (ATED) for periods when the property was not commercially let. We can help you check if the ATED is due for your property, or if a relief should be claimed.

Non-resident companies currently pay Income Tax on profits from letting UK property instead of Corporation Tax. This will change from 6 April 2020. HMRC is telling landlords that the company must register for Corporation Tax in the UK from April 2020. We can help you with that.

Some tenants of overseas landlords have also received letters from HMRC. These letters imply that the tenant should deduct tax from their rent and send that tax to HMRC.

This is alarmist, as the obligation to deduct tax lies with the letting agent, if there is one. Where the landlord is already registered with HMRC through the non-resident landlord scheme to receive rent gross, there is no obligation to deduct tax from the rent at all.

The best approach is to reply briefly to HMRC giving contact details of the landlord or their letting agent. It is not the tenant’s responsibility to tell HMRC about their landlord’s ownership structure.

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