According to tax and advisory firm Blick Rothenberg, people that had sold a residential property during the 2018/2019 tax year will receive a reminder letter from HMRC asking them to check whether they owe Capital Gains Tax (CGT).
Blick Rothenberg partner Suzanne Briggs said “Immediate concerns are to anyone that sold a property after 6th April 2020 where CGT was payable, should have reported the disposal and paid the CGT within 30 days of the sale, if not reported will incur a late return, a late filling penalty and interest on the late payment of the CGT”.
“HMRC should have proactively educated taxpayers rather than penalising them for late filling, as there has been little publicity and the short filling deadlines will catch many people out”.
“Taxpayers will be alarmed by receiving these nudge letters that will ask them to review their CGT position and either amend their tax return or make a disclosure, and should not ignore them, but take immediate advice, or they could face fines and interest charges”.
“Individuals that sold a property which may not have been their main home, will receive the letters from HMRC, I am not sure how HMRC will decide that the property may not of been the taxpayers main home, and generally HMRC do not do internal checks to verify information so the taxpayer may receive the letter but has nothing to disclose”.
“Importantly taxpayers must be aware that main residence relief only applies in full if a property has been your only or main residence throughout your ownership”.
“Main residence relief legislation 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”.
Anyone who thinks they can get away with not disclosing property sales where tax may be due must not be in the real world. Apart from the obvious that it is tax evasion, the clue is in the 'title' (literally): title deeds are registered with Her Majesty's Land Registry and a return is filed to Her Majesty's Revenue & Customs regarding stamp duty. They know when you have sold a property and they already know if you own other properties or the property that you have sold was not your main residence. They know!