Selling or about to sell a home

A big part of the problem is that taxpayers are not aware of the requirement to report the gain and pay the CGT due within 60 days of the completion date, (30 days, for deals completed before 27 October 2021). In many cases, the solicitor and estate agent advising the taxpayer also seem unaware of the requirement to report.

HMRC is finally taking some proactive action in this area as letters are being sent out by HMRC’s ‘wealthy teams’ (see below) to taxpayers who have recently sold a property that HMRC believe is not their primary residence. The same letter is also being sent to some property owners considering selling. This may be because HMRC’s Connect database includes details of valuable properties advertised for sale.

You may not get a copy of the HMRC letter as the taxpayer’s agent.

It is worth reading the HMRC letter (see link) as it includes a long list of FAQs, but these are not sufficient to provide answers to all the points a taxpayer will need to understand when calculating and reporting a gain.

On some matters the information is misleading by omission, for example, it doesn’t mention that the SDLT/ LBTT/LTT paid on the acquisition of the property can be deducted when calculating the gain. The FAQs also don’t explain how to report the disposal of a jointly owned property.

At two points in the list of FAQs HMRC suggests the taxpayer refers to the Appendix 18 of the HMRC capital gains manual, which is written for HMRC employees NOT taxpayers!!

At no point in the letter does HMRC suggest the taxpayer should talk to a tax adviser or their accountant before attempting to complete the UK Property Account to report the gain.

HMRC letter about residential property disposals

This information is taken from the weekly Tax Tips, published by the Tax Advice Network, for which you can subscribe at www.TaxAdviceNetwork.co.uk