HMRC Nudge Letters To Persons Of Significant Control

HMRC are sending out letters again, this time to Persons of Significant Control (PSCs) that declare an income below £100,000 or simply haven't submitted a tax return ...

Before PSC was introduced, a UK company only needed to record immediate, legal owners of their shares and send these to Companies House. Since the 6th of April 2016, companies must now look at their entire ownership structure to identify relevant persons who have significant control of the company.

Broadly speaking, a PSC is:

- directly or indirectly owns more than 25% of the shares in a company
- directly or indirectly holds more than 25% of the voting power of a company
- has the right to appoint or remove the majority of directors of a company
- can exercise significant influence over the company

Much of this information is on a public register at Companies House, so it's also available to HMRC and their Wealth Team is now sending multiple letters to individuals on the PSC register.

Firstly, one is directed at individuals on the PSC register who have submitted a 2020/21 tax return with income less than £100,000. Secondly, the other one is being sent to PSCs who are not yet submitting self-assessment tax returns.

"These letters ask the taxpayer if they've considered whether they have anything undeclared!"

And this includes benefits received from the company, such as share options or income created from the disposal of shares. If HMRC identifies any gains or additional sources of income, taxpayers will be asked to amend their 2020/21 and 2021/22 tax returns.

Letters were sent in late October 2022, so be sure to take a look for any brown envelopes in your correspondence, and make sure you speak to your accountant and get it dealt with before any penalties are applied.

If you feel inspired to find out more about anything I've said here, do call me on 01908 774320 or leave a comment below and I'll be in touch as soon as I can.