HMRC consult on how to reduce the burden of ATED reporting
ATED is an annual tax charge on companies and mixed partnerships that own residential property. In the 2014 Budget the government announced that it will extend the scope of the ATED charge from residential properties worth more than £2 million to properties worth more than £500,000.
There are a number of reliefs from the ATED charge, for example where property is rented out, or is a farmhouse. However even if relief is available it is still necessary to submit an ATED return and claim the relief. HMRC have now issued a consultation which asks for views on possible ways of reducing the administrative burden of ATED reporting for taxpayers owning properties that attract relief.
Two proposals have been put forward, although HMRC indicate that they are open to other suggestions:
Option 1: Those claiming the same relief for more than one property would make a single return for all relievable properties on the normal filing date and a further return after the end of the chargeable period, which would include acquisitions and disposals made during the chargeable period. (For example multiple rental properties)
Option 2 Introduce an exempt status regime for those entitled to claim full relief i.e. those entitled to claim a relief which reduces their ATED liability to nil could apply to HMRC for exempt status meaning that an ATED return would not be required annually but a confirmation of status would be required at various intervals.
The ATED charge was introduced to counteract thespecific issue of individuals avoiding Stamp Duty Land Tax on the acquisition of high value residential property by using a limited company to own the property.
We believe that the extensive widening of the ATED charge to residential property with a value of in excess of £500,000 will impose a considerable burden on many more businesses that are not the intended target of this legislation. This means many more businesses will have to carry out valuation exercises and claim reliefs simply to demonstrate that there is no tax charge.
We therefore believe that consideration must also be given to ways of entirely removing such business from the scope of the ATED. We would welcome members views on this consultation and the proposals. Please send email comments by 9 September, or if you wish to discuss your views please telephone NFU Head of Taxation, Michael Parker on 02476 858722.