Certificates of tax deposit - a golden ticket?

As reported in a previous weekly tax brief article, the certificate of tax deposit (CTD) scheme allowed taxpayers to deposit funds with HMRC in return for a certificate which could be encashed at a later date. This scheme ceased in 2017 and HMRC announced that CTDs would need to be used or refunded.

HMRC set a backstop date of 23 November 2023 for taxpayers holding CTDs to either confirm a specified outstanding liability they wished the certificates to be surrendered against or to return them to HMRC and request a repayment of the monies. In the period leading up to the expiry date, it provided a third option of transferring the CTD value(s) into a temporary SAFE account, in cases where an enquiry settlement was imminent but not finalised.

Under a previous freedom of information (FOI) request in October 2022, RSM obtained details of the number of taxpayers who held CTDs and the overall amounts, with a little over 12 months remaining for certificate holders to act before the scheme closed. This showed there were 3,337 unallocated certificates with a total value of £391,380,382. A more recent FOI request showed that, a week after the scheme had officially closed, 1,874 unallocated certificates with a total value of £144,223,364 still remained.

While there was a flurry of activity in the 12 months taxpayers were given to act, and HMRC has confirmed there remains a further £95,469,779 in the process of being applied to tax liabilities or refunded, there remains nearly £50m which, under the terms of the scheme closure, will potentially be forfeited unless the certificate owners can be traced.

HMRC confirmed it has contacted 94% of the remaining CTD holders and is continuing to contact the rest. However, it has provided no indication of what ‘contact’ means or how concerted its efforts will be to return the monies to the rightful owners. Considering the first FOI request confirmed that valid certificates were in existence for most years dating back almost half a century to 1975, and there remained almost £7m of certificates more than 20 years old, it begs the question of how successful HMRC will be in its endeavours to trace the holders. As this could be for a variety of reasons, such as the death, emigration or change of address of holders, or holders no longer being in the self-assessment system, it may prove a fruitless task. There is also a question mark over how focused HMRC is being in its efforts to trace holders with the default position being the monies remain in the Treasury coffers. 

It will be interesting to see how these numbers look in another 12 months’ time. Meanwhile, for those who may have a dim and distant memory of acquiring a CTD, now is the time to look through those old tax papers for what could be a golden ticket.