HMRC have recently launched a One to Many letter campaign in respect of capital allowances super-deductions.
A “One to Many” approach is where HMRC send one standard message to many customers. The aim is to influence customers’ behaviour, so they are more likely to comply with their tax obligations. A One to Many approach is not a compliance check.
Super-deductions are enhanced capital allowances for companies investing in qualifying new plant and machinery between 1 April 2021 and 31 March 2023. They can claim:
- a 130% super-deduction on qualifying plant and machinery; and
- a 50% first-year allowance for qualifying special rate assets.
HMRC are sending two separate letters:
- For leasing restrictions – the HMRC letter is to companies that may have claimed super-deductions on assets that they lease out. Spending on plant or machinery does not qualify for the super-deduction if it is bought to lease or to hire to someone else.
- For companies with accounting period straddling 1 April 2021 – the HMRC letter requests them to check the date when the company entered into the contracts. The super-deduction is not available if the company entered into a contract to buy the plant and machinery before 3 March 2021 (see FA 2021, s. 9(7)).
The letters highlight the rules and guidance and contain links to them. They have been copied to the authorised agent if there is one.
If the company has claimed super-deductions incorrectly, HMRC are asking companies to amend their tax return.
HMRC have provided CIOT with the following additional information about the campaign:
- a small number of companies have been sent the letters;
- HMRC issued the letters on 1 March 2023; and
- HMRC regularly send letters to taxpayers to educate, remind or prompt them to review their tax affairs, particularly where they have information that suggests there are specific risks to the payment of tax owed.
Related content from Claritax Books
Capital Allowances, by Ray Chidell and Jake Iles, offers in-depth coverage of plant and machinery allowances, structures and buildings allowances, and all other UK capital allowances.
Full reference is made throughout to legislation, case law and HMRC guidance.