ATED 

ATED is an annual tax on non-natural persons (eg, companies) with interests in UK dwellings valued at more than £500,000. The amount payable depends on the value of the property.  

Reliefs are available, including qualifying property rental business relief (QPRBR). This requires that the property is "run on a commercial basis and with a view to a profit”. QPRBR cannot be claimed if a non-qualifying individual is allowed to occupy the property. Non-qualifying individuals include persons who have an interest in the property or are connected to someone who does. 

The reliefs are not given automatically and must be claimed in the annual return or in a relief declaration return. 

HMRC’s campaign 

HMRC is writing to companies that: 

• own UK residential property valued at over £500,000;
• have not declared any profits in their income tax returns for 2017 to 2020; and
• either:
  • filed ATED returns which included claims for QPRBR; or
  • have not filed ATED returns. This may be because the company believed that QPRBR was available with the result that no ATED was payable.

HMRC states that, because the company has not made a profit, it is unlikely that qualifying property rental business relief is available. Therefore, the company may have ATED liabilities to pay.  

One of four letters will be sent depending on whether returns have been submitted and if the company has an agent. The letters will be sent in batches over the next few months. 

Action to take 

The letters set out in detail the actions the company should take.  Depending on the circumstances, this may require the company to: 

• make a disclosure to HMRC if it finds it has ATED liabilities to pay; or
• contact HMRC and provide the information requested in the letter if it believes that it is entitled to QPRBR. 

The company should submit any outstanding ATED returns. 

The company is required to respond within forty days of the date of the letter.  

If the company does not respond by the deadline, HMRC says that it may make a discovery assessment of what it believes the company owes. This could increase the amount of any penalties charged by HMRC. Interest will be charged on any tax paid late.  

Further information 

• HMRC’s ATED technical guidance
• ICAEW’s TAXline article Time to think about ATED?

Template letters: 

• ATED returns filed - company has an agent
• ATED returns filed - company does not have an agent
• No ATED returns filed - company has an agent
• No ATED returns filed - company does not have an agent