HMRC has been contacting some taxpayers regarding income tax relief and Venture Capital Trust shares.
Craig Simpson, Tax Partner at Bates Weston, looks at HMRC’s campaign.
A letter was sent by HMRC in March to a sample of Venture Capital Trust (VCT) share subscribers, who had claimed income tax relief on the subscription in their 2015/16 self assessment tax returns. The letter provided information about VCT income tax relief obligations and the circumstances in which the relief given may be withdrawn.
If a taxpayer has sold VCT shares acquired during the tax year ended 5 April 2016, and not previously notified HMRC about the sale, HMRC asked them to complete and return a form which would bring their tax affairs up to date, withdrawing the income tax relief if the shares were sold within 5 years of acquisition.
The letter asked taxpayers to return the form by 13 April or to email their responses to email@example.com. Given the difficulties experienced with the postal system and the impact of Covid-19, HMRC have relaxed this deadline. HMRC advised the Chartered Institute of Taxation (CIOT) as follows:
“The letters were issued before the sudden escalation in the Government’s response to COVID-19. We recognise the difficulties and uncertainties faced by individuals at this time and therefore we are no longer asking for responses to be provided by 13 April 2020. If individuals wish to make contact with us regarding their VCT investment, they can do so using the email address provided on the letter – firstname.lastname@example.org”.
” It is good to see HMRC launching a campaign to ensure taxpayers understand when the income tax on VCT investments is clawed back, and to see them alter their timescales to reflect to challenging times we find ourselves in.”
If you need our help with this issue, please do get in touch with Craig Simpson.