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HMRC CGT Letters - What you need to know
HMRC Capital Gains Tax Letters - What you need to know
Recently we have seen a new batch of Capital Gains Tax (“CGT”) letters being issued by HM Revenue & Customs (“HMRC”) to those who they suspect have not declared the CGT liability due as a result of the sale of a UK residential property within the required 60-day time limit.
This is not the first time that such CGT letters have been sent by HMRC. Large batches of letters were sent in 2020 and 2021, with more letters coming as and when HMRC suspect that CGT has not been reported and paid within the correct timescale.
A number of concerned clients have contacted us after having received such a letter, which states that: “We have information that shows you sold the property above in the tax year ended 5 April 20XX”
The letter follows with:
“You should have reported and paid Capital Gains Tax if (both of the following):
· The property above is not your main home
· You sold it with a completion date between 6 April 20XX and 5 April 20XX”
The letter goes on to mention that the recipient must pay late filing penalties, interest and tax they owe now. HMRC’s Penalties Factsheet then explains that penalties for not having declared and paid the CGT due at the time could be up to 100% of the tax due as a result of the sale.
Quite a “nudge” to receive from HMRC and while the above may be true in certain circumstances, we have recently successfully responded to such letters where clients do not in fact have any tax liability and therefore no requirement to have filed a CGT Return with HMRC.
There are many reasons that you may have received a letter from HMRC asking you to check whether you should have paid CGT on the sale of a residential property. HMRC receive millions of lines of data each day from organisations such as the Land Registry or banks and if this data shows a discrepancy, this then alerts HMRC to a potential tax liability which has not been reported.
If you have receive one of these CGT letters, it is very important that you do not ignore it. Doing so may result in a formal investigation or enquiry into your tax affairs even if these have been reported correctly and in time.
In each case, we recommend that you seek advice from a qualified and experienced professional in order to check your CGT circumstances before replying to HMRC. Our Managing Partner, Charles Tateson, worked for many years within HMRC as a Senior Tax Professional and CGT Inspector and is more than happy to discuss how we could help you deal with such a letter.
This may include responding to HMRC with our reasoned argument as to why no CGT is due as a result of the sale of the property, explaining why HMRC’s view is incorrect. Alternatively, if there is CGT to pay as a result of the sale then we can assist you in filing the CGT Return with HMRC and ensuring that the tax due and any penalties charged are at the lowest possible amounts.
With HMRC changing the rules on reporting and paying Capital Gains Tax on residential property, we can help you to get things right.
We have extensive experience in reducing the Capital Gains Tax due on the sale of UK property and land for non-UK residents.
When you come to sell an asset that was inherited or received as a gift, there may be complex Capital Gains Tax issues to consider.
When assets are split or sold as the result of separation or divorce, there are specific Capital Gains Tax rules that must be considered.
If you give an asset to a family member or friend, there may be Capital Gains Tax consequences. See how we can help you in such a situation.
When selling an asset, there are a number of reliefs available which may reduce, exempt or delay the Capital Gains Tax due.
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Over the last few years, HMRC have changed the rules for reporting Capital Gains and the Capital Gains Tax due as a result of the disposal of residential properties.
Now you must file a Capital Gains Tax Return to HMRC within 60 days of the disposal of the asset, whereas before you would have been able to wait until it was time to file a Self Assessment Tax Return for the tax year in which the disposal was made.
Should you fail to report the disposal to HMRC and pay the Capital Gains Tax due as a result of the disposal within the new 60 day time limit, you may face a financial penalty.
HMRC's own website states that:
"If you sold your property after 6 April 2020 you must report and pay Capital Gains Tax within 60 days of selling property in the UK.
You may have to pay interest and a penalty if you do not report gains on property within the time limit."
Here at The Tax Faculty, our experts are here to help to ensure that you are in a position to report the correct Capital Gain to HMRC and pay the Capital Gains Tax due at the appropriate time.
We offer a full Capital Gains Tax service which includes our full consideration of the reliefs available to reduce the potential Capital Gains Tax to the minimum level possible, while remaining within the letter of the law governing such disposals.
This isn't limited to property transactions either, we also provide a full Capital Gains Tax service on the disposal of shares and other assets.
We have a proven history of reducing the final Capital Gains Tax due for our clients by considering all relevant facts and information provided to ensure that we are in a position to accurately advise on the most cost effective way of reporting the Capital Gain to HMRC.
Please note, non-UK callers may need to call 0207 101 3845 if your line cannot connect to our 0800 number.
Our Promise - Computations in 24 Hours
The Tax Faculty 24 Hour Guarantee
We know that any tax issues are worrying for our clients, that's why we guarantee to provide you with an initial Capital Gains Computation within 24 hours of your providing us with the information that we require.
In addition, we use all our experience and expertise to ensure that you pay as little tax as possible, all while staying within the boundaries of tax law.
Our Managing Partner worked as a Senior Tax Professional within the Capital Gains Tax team in HMRC, giving us an unparalleled level of experience to help our clients reduce their tax bills when they sell property or shares.
Contact us today on freephone 0800 0016 878 for a free consultation on all Capital Gains Tax issues, or fill out the handy form below and we'll get back to you as soon as possible.
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