HMRC chase potential CGT payments
According to Blick Rothenburg, a tax and advisory firm, HMRC are sending out 14,000 letters to people who have sold residential property during the 2018/19 tax year to check whether they owe Capital Gains Tax (CGT).
The Financial Reporter, published a comment from Suzanne Briggs, a partner at the firm.
“Anyone who has sold a property after April 6th this year where there is CGT to pay, should have reported the disposal and paid the CGT within 30 days of the sale. A late return will incur a late filing penalty and interest on the late payment of the CGT.
“There has been little publicity about this new regime and the short filing deadline will catch many people out. HMRC should be proactively educating taxpayers rather than penalising them for late filing after the event. Anyone who thinks that they owe money should deal with it now or they could face fines and interest charges.
“The‘nudge’ letter relating to the 2018/19 tax year will invite taxpayers to review their CGT position and either amend their tax return or make a disclosure. Taxpayers will be alarmed by receiving these letters, but they should take care not to ignore them and to take immediate advice or they too could face fines and interest charges.
“HMRC are targeting the letters at individuals who have sold a property which may not have been their main home. It is unclear how HMRC will conclude that a particular property may not have been a taxpayer’s main home, but from my experience of previous nudge letter campaigns, HMRC do not generally undertake any internal checks to verify the information they hold and so taxpayers can receive a letter where there is nothing to disclose.
“It is important to be aware that main residence relief (which exempts a capital gain on the sale of a property) only applies in full if a property has been your “only or main residence” throughout your ownership. The legislation around main residence relief can be complex if you have not lived in the property as your main residence throughout or you own more than one property. It is not always the case that main residence relief applies to the property being sold.”