HMRC is using its data analytic powers to contact taxpayers where it thinks there’s a chance that income has been overlooked.
What it’s interested in is income from distributions or dividends. It has been looking at company accounts, and where it has identified a large drop in the profit and loss account reserves, which might suggest payment of
a distribution or dividend, it has been writing to taxpayers to ask them to check that any such income has been declared on their self assessment tax returns. It does not necessarily follow that tax is owing in such cases. It may be, for example, that any such dividend or distribution was covered by the personal allowance or Dividend Allowance.
It is, however, always important to take notice of correspondence of this type from HMRC, and act within the timescale indicated. This letter, for instance, advises that failure to respond may open the door to a compliance check by HMRC, with the potential for higher levels of penalties for any non-compliance.
If you would like more information or any advice on this article then please contact us by emailing solutions@ellacotts.co.uk or call us on 01295 250401. You can also contact us here with your query and we will get back to you.
Information for readers: This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.
