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HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
, see all updates

Debt and return pursuit: foreign cases: manual assessments and penalty determinations on tenants and letting agents of non-resident landlords

Background

Since 6th April 1996 the tenant or letting agent of a landlord who usually lives outside of the United Kingdom has been required to deduct tax from the letting income, unless the Centre for Non-Residents (CNR) has approved the receipt of the income with no tax deducted. The tenant or letting agent should account for tax deducted under the scheme (after allowable expenses) on quarterly returns (NRLQ) and an annual return (NRLY), which are sent to Audit & Pension Scheme Services (APSS.

Audit & Pension Scheme Services (APSS) are responsible for raising assessments to recover tax deductible from rent payable to a non-resident landlord (NRL) which has not been accounted for under the scheme. These assessments will be raised and accounted for on SAFE, which will issue any requests for payment necessary. APSS will also be responsible for raising penalty determinations for failure to submit NRL quarterly or annual returns or where it is discovered that these returns have been fraudulently or negligently completed. These too are accounted for and dealt with by SAFE.

Legislation

SI 1995/2902, Regulation 10(5) provides for assessments on the tenant or letting agent where tax included on a return is underpaid.

SI 1995/2902, Regulation 10(9) provides for assessments on the tenant or letting agent where it appears that an amount which should have been included in a quarterly return, and paid to the HMRC, has been omitted from the relevant return, or we are dissatisfied with a quarterly return.

Penalties are imposed under Section 98(1) TMA 1970 for failure to render a quarterly or annual return or under Section 98(2) TMA 1970 where it is discovered that a return has been fraudulently or negligently completed.

SAFE action

SAFE will issue two demand notes for the debt. Failing payment, the charge will be passed to IDMS via the SAFE/IDMS interface.

When a charge on SAFE is amended in any way, SAFE will send an update to IDMS.

Debt management office action

Enforcement proceedings

You may use any of the normal enforcement methods to recover tax due under both Regulation 10(5) and Regulation 10(9) Taxation of Income from Land (non-residents) Regulations 1995, or to recover a penalty determination.

Distraint (not Scotland)

Describe the debt on form C204 as ‘Tax due from rents payable to non-residents’.

County Court Proceedings (England and Wales only)

On the front of the form N1, at ‘brief details of claim’ enter ‘tax due and payable from rents payable to non-residents’. For particulars of claim see DMBM616070.

Summary proceedings (not Scotland)

Describe the debt on form SP24 (form 33 in Northern Ireland) as ‘Tax due under the Taxation of Income from Land (non-residents) Regulations 1995’ and show the quarter ended. Where interest is also claimed, amend the form SP24 (form 33) to show it as claimed ‘under Section 87 TMA 1970’.

Summary proceedings (Scotland only)

On the statement of claim, at ‘details of claim’ show your particulars of claim, as appropriate, as

‘Tax due under assessment for the period ended (date) made upon the defender by an Inspector of Taxes under Regulation 10(5) Taxation of Income from Land (non-residents) Regulations 1995’ in respect of rents payable to non residents charged on and payable by the defender; and interest on late payment of tax under Section 87 TMA 1970 as specified in the computations annexed, or

‘Tax due under assessment for the period ended (date) made upon the defender by an Inspector of Taxes under Regulation 10(9) Taxation of Income from Land (non-residents) Regulations 1995’ in respect of rents payable to non residents charged on and payable by the defender; and interest on late payment of tax under Section 87 TMA 1970 as specified in the computations annexed.

Summary Warrant (Scotland only)

On the Schedule of debt under source assessed describe the debt as ‘Tax due from rents payable to non-residents’.

Ordinary cause(Scotland only)

The condescendence should read, as appropriate:

Assessed Tax

The defender is liable to pay tax due under [Regulation 10(5)][Regulation 10(9)] Taxation of Income from Land (non-residents) Regulations 1995’. That tax is due under [an assessment/assessments] made by an Inspector of Taxes on rent payable to a non resident landlord as shown in the table below:

Period ended Amount of assessment Amount paid to account Tax payable and unpaid
       
Insert date Insert amount Insert amount Insert amount

 

The total of [ ] remains unpaid and is the sum sought in the [ ] crave. Interest on that sum is due from [ ] in terms of the provisions referred to in condescendence [ ].

Interest on assessed tax

The defender is bound to pay interest on tax payable under the assessment(s) referred to in condescendence [ ]. Reference is made (a) Section 87 of the Taxes Management Act 1970 and (b) Section 178 of the Finance Act 1989. The total interest due to [ ] is [ ] which sum remains unpaid and is the sum sought in the [ ] crave.

Certificate of debt

If you need to produce a certificate of debt see DMBM615420.

Interest on late payment

Assessments

Late payment interest on assessments due under Regulation 10 (5) and 10 (9) is due at the same rate as interest under Section 87 TMA 1970, from 30 days after the end of the relevant return period (quarter) until payment, irrespective of the date the assessment was raised.

Penalties

As for other penalties under Section 98 TMA 1970, late payment interest is charged under Section 103A TMA 1970.