HMRC releases guidance for corporate non-resident landlords

This news item was updated on Monday 20 January 2020 at 11:11am.

Non-resident landlords that are companies will start paying corporation tax rather than income tax on their profits from 6 April 2020. HMRC has released new guidance concerning this change.

Key points to note from the guidance are that:

  • HMRC is automatically registering non-resident landlords for corporation tax and issuing a corporation tax unique taxpayer reference (UTR). Companies should contact HMRC if they have not received a UTR by 30 June 2020 or if they already have a corporation tax UTR.
  • Agent authorisations will not transfer. Companies wishing to retain the services of an existing agent for corporation tax will need to authorise that agent to act for them in respect of corporation tax.
  • Companies will need to register with HMRC online services to file their corporation tax return online. They may also need to register with Companies House if they have a permanent establishment in the UK.
  • Transitional rules apply in respect of income tax losses and capital allowances.
  • Relief for finance expenses are treated differently for corporation tax and the corporate interest restriction may need to be considered.
  • Accounting periods will be set up to default to end on 5 April. If the company prepares its accounts to a different date, it must inform HMRC in writing.
  • Payment dates will be different. Consideration will need to be given to the income tax regime and whether an application to reduce payments on account is required. There will be a one-off transitional rule in respect of quarterly instalment payments for very large companies.

Further detail on many of these issues is available to Tax Faculty members in an article by Andy Tall in the November issue of TAXline.

HMRC’s guidance does not apply to those companies that:

  • have tax deducted under the non-resident landlord scheme and are not required to file a tax return;
  • start a UK property business on or after 6 April 2020;
  • file an income tax return that is not a Non-resident Company Income Tax Return (SA700).

The guidance also states that non-resident companies will not have to register for corporation tax and file a company tax return for an accounting period if the liability to corporation tax is fully offset by tax deducted under the non-resident landlord scheme and it has no chargeable gains for the period.