Potential Tax Risk | Risk Assessment

Have you sold a residential property in the last 20 years?

Yes
No

Was it your main residence for your entire period of ownership?

Yes
No

Did you make a gain on the disposal?

Yes
No

Did you report it to HMRC?

Yes
No

Have you received a letter from HMRC asking whether everything has been disclosed in your tax returns?

Yes
No

Since 6th April 2020 any disposal of UK residential property by a UK resident person on which a gain arises must be reported to HMRC within 30 days of the disposal. In addition the disposal must be reported on the disponer’s self-assessment tax return. Before that date the disposal had to be reported only on the self-assessment tax return. Main residence relief may be available on the disposal but the availability of the relief is dependent on a number of factors.

Please telephone us or email us if you wish to discuss this matter further.

HMRC are increasingly sending out what it calls ‘nudge letters’ asking a taxpayer to confirm that his or her tax affairs are up to date or that he or she will bring them up to date. Such letters contain a warning that making a false statement could result in a criminal prosecution.

We can advise you on the best response to such a letter and highlight any areas where further disclosure to HMRC should be made.

Please telephone us or email us to discuss the matter further.

Have you entered into any form of tax planning?

Yes
No

Has it been disclosed to HMRC in your tax return under the Disclosure of Tax Avoidance Scheme Rules?

Yes
No

HMRC has deliberately blurred the distinction between tax avoidance and tax evasion and are enquiring into tax planning transactions with ever increasing aggression. We have extensive experience on advising clients on historic tax planning. Many taxpayers believe that their planning has been successful because they have not heard anything to the contrary from HMRC. Quite often that is because the disclosure of the planning steps made to HMRC has been inadequate with the result that the taxpayer is exposed to intrusive investigation and substantial back tax liabilities and penalties many years after the event and without his being aware of his peril.

We can review your tax planning transactions and the disclosure made to HMRC to identify whether you are at risk.

Please telephone us or email us to discuss the matter further.

Were you born overseas?

Yes
No

Do you think that you are domiciled overseas?

Yes
No

Have you in the last three years taken professional advice on your domicile status?

Yes
No

Being non-UK domiciled for tax purposes can offer various benefits. A non-domicile status needs to be kept under review.

We specialise in providing advice to taxpayers on their domicile and residence status.

If you would like to discuss this further please telephone us or email us.

Have you ever owned assets situated abroad?

Yes
No

Have you disposed of any of your overseas assets?

Yes
No

Do you receive any income from them?

Yes
No

Did you make a gain on the disposal?

Yes
No

Did you include this on your tax return?

Yes
No

HMRC has extensive powers in its armoury against taxpayers including those who make innocent mistakes in their reporting to HMRC. For example, penalties can be imposed depending on the income or gains that have been omitted from a return and the territory in which the asset is situated of up to 200% of the tax liability.

If you would like to discuss this further please telephone us or email us.

Have you ever made a trust?

Yes
No

Is this still in existence?

Yes
No

Did you take advice on setting it up?

Yes
No

Creating a trust is a matter on which specialist advice should be taken. This is because one needs to ensure that the document is effective and that the assets which are the subject of the trust have been transferred to the trustees. It is also important to ensure that the type of trust created does not trigger an Inheritance Tax Charge for the settlor and to ascertain the continuing tax treatment of the trust.

If you have created a trust and wish for us to review the trust documentation and determine the tax to which the trust is subject please telephone us or email us to discuss the matter further.

Have you taken advice on the trust in the last 3 years?

Yes
No

The creation and running of a trust is not simply a one-off exercise. Tax legislation, a change of beneficiaries, disposal of trust assets or the death of the settlor may all have an effect on the taxation treatment of a trust. In addition, the implementation of the Fifth Anti-Money Laundering Directive may require a trust to be registered with HMRC.

If you would like us to review a trust to ensure that the trust is complying with its reporting requirements and the correct tax treatment of income and gains is being applied please telephone us or email us to discuss the matter further.

Do you own a company which carries on a business?

Yes
No

Does it own any assets which are not used in the business?

Yes
No

Business Property Relief at either 100% or 50% is a valuable relief. Assets which are not used wholly or mainly for the purposes of a business will not qualify for Business Property Relief. There are also other restrictions on the availability of the relief. It is, therefore, important for all business owners and shareholders of certain companies to be aware of the availability of the relief and what action may be taken to maximise the availability of that relief.

If you have any issues in relation to the availability of Business Property Relief or would like piece of mind as to whether relief is available please telephone us or email us to discuss the matter further.

Does it have a large cash surplus which is not designated for a specific business purpose?

Yes
No

Companies often hold large cash funds particularly in uncertain financial times. Business Property Relief may not be available on that cash because HMRC may argue that it is an excepted asset. What constitutes a large cash balance will depend upon the business involved.

If your business holds a substantial cash balance please telephone us or email us so that we can provide advice on the availability of the relief and what action can be taken now to demonstrate that it is not an excepted asset.

Do you own or farm any land?

Yes
No

Is the land used for activities other than the growing of crops or rearing of livestock?

Yes
No

Agricultural Property Relief together with Business Property Relief at either 100% or 50% are valuable Inheritance Tax reliefs. Many landowners often assume that relief will be available to them and subsequently have a nasty shock. We recommend to such of our clients that we review their businesses to determine the availability of the reliefs, identify any areas of risk and recommend action to be taken to maximise the reliefs.

Please telephone us or email us to discuss the matter further.

Have you been the executor of a will?

Yes
No

Did you take professional advice on obtaining probate?

Yes
No

It seems to be a little known fact that where no IHT account has been delivered to HMRC, or the property by reference to which tax is chargeable has been omitted from an IHT account, there is no limitation period in which HMRC must bring an action for recovery of unpaid IHT where the loss of tax has been brought about deliberately. In other cases the limitation period is 20 years. Both of these situations can have create a nasty shock as an article we wrote demonstrates.

If you have been an executor and have any concerns please telephone us or email us to discuss the matter further.

Well Done for completing the tax risk assessment. It would appear that you are ‘low risk’ but it should be remembered that nothing relating to tax can be guaranteed.

If you do have a matter you wish to discuss with us please telephone us or email us.

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Tax Risk Assessment

Tax Risk Assessment Questionnaire

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