A rising trend of 2024 for me has been HMRC interest in ATED returns, or is that in truth an interest in ATED return related penalties?
ATED applies where residential property with a value in excess of £500,000 is held within a company.
If used for a qualifying purpose no charge to tax arises but, the company is required to file an annual Relief Declaration Return [“RDR”] to claim exemption from charge.
If that RDR is not filed, or not filed on time, penalties accrue which can amount to £1600 per annum for each and every year of failure.
ATED is a self-assessed tax, but unlike other regimes HMRC are not required to provide any form of warning to the taxpayer that penalties are accruing.
If a number of years RDRs have been missed and/or if there is more than one type of relief applicable for the year necessitating multiple returns, the penalties can really stack up.
Recent taxpayer success has been found at Tribunal arguing special circumstances applied to the penalties arising. The initial years penalties were upheld in full but subsequent years were reduced to £100 per annum.
Obviously each case turns on its precise facts.
I’m happy to help if anyone wants to discuss their exposure to ATED or appeals against penalties incurred.