UK and International Tax news

HMRC Issues Guidance On ATED

Friday 27th September 2013

Further to technical guidance issued by HMRC in August 2013 on the application of the new Annual Tax on Enveloped Dwellings (ATED) to high value residential properties owned by non natural persons (NNPs), a further Notice has been issued on the ATED return requirements.

The Notice sets out the requirements of the new return following FA 2013 and the ATED (Returns) Regulations (SI 2013/1844).

A return is required where a property is a residential property (a dwelling) situated in the UK valued at more than £2 million on 1 April 2012, or at acquisition if later, and is owned, completely or partly, by a company, a partnership where one of the partners is a company or a ‘collective investment vehicle’ such as a unit trust or an open ended investment company.

A person that owns property in its capacity as a trustee of a settlement or who is a beneficiary of a settlement is excluded from ATED and is not required to complete a return.

Where a person is holding the property as a bare trustee/nominee (and holds no beneficial interest in the property themselves) then they will not need to complete a return. However, if the beneficial owner meets the ownership condition (a company etc) then that beneficial owner will need to complete a return.

There are a number of exemptions from ATED which mean filing may not be required and these extend to charitable companies, public bodies, bodies established for national purposes, and dwellings conditionally exempt from inheritance tax.

In addition, there are reliefs available which may reduce the ATED liability to zero but these must be claimed in the ATED Return.

Generally an ATED return must be made within 30 days of the date on which the person first comes within the charge to ATED, i.e. on acquisition.  A person who owns a single-dwelling interest on the first day of the chargeable period (1 April each year) must file the return by 30 April.  However, there are special rules for the first chargeable period 1 April 2013 to 30 March 2014 for which the return is due by 1 October 2013 for dwellings owned at 1 April 2013.

There are two 90 day filing dates provided for in the legislation, in respect of ‘new dwellings’ and ‘dwellings produced from other dwellings’.

A return is required for each dwelling where ATED is due. Where a relief in relation to a dwelling is being claimed, one return should be submitted for each relief claimed.

Where a return needs amending, for example, because the property no longer qualifies for a relief, an amended return must be submitted within 12 months of the end of the chargeable period to which the amendment relates. However, if the return to be amended is delivered on or after 1 January following the end of the chargeable period to which the return relates then the time limit for making an amendment is limited to a period of three months after the date of the return.  Incorrect and late filed returns may generate penalties.

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