Chartered Accountants Northampton Harris & Co reports an HMRC campaign to identify UK taxpayers who have undeclared capital gains on property disposals may have a wider impact that anticipated, according to accountancy firm Watson Buckle.
The HMRC’s property sales campaign, announced in March this year, targets individuals who have sold a property, either in the UK or abroad, and failed to notify the tax authorities of any liability for capital gains tax (CGT).
Under the terms of the deal, anyone who wants to disclose a potential liability must notify HMRC by 9 August 2013 and file an application by 6 September 2013 if they want to take advantage of the scheme which will offer preferential options for settlement, including potentially lower penalties than might otherwise apply.
The campaign does not apply to anyone who sells property as part of their business, through their company, or as a trustee, but could apply to the primary residence under certain circumstances, for instance if that home was let and the owners then moved back in.
Watson Buckle warns that after September HMRC is likely to begin checking all residential property sales to identify instances of undeclared gains. The firm says HMRC will also start reviewing the tax records of anyone who sold residential properties.
Susan Sedgwick, managing partner at Watson Buckle, said:
‘It is understood that HMRC will be targeting sales from April 2007 onwards, using National Insurance numbers on Stamp Duty Land Tax (SDLT) forms to tie these in with income tax records of individuals.’
‘While HMRC’s campaign primarily focuses on second homes, it will also target sales of homes which have been used for reasons other than residential accommodation, for example where one may have claimed a tax deduction for home running costs.’
Dominic Arnold, head of tax investigations and disputes at law firm Moore Stephens agreed that anyone who has sold property but not informed HMRC should consider getting advice on the potential tax issues.
‘HMRC has direct access to details of all UK residential property transactions and routinely collects information on UK and overseas properties from other sources, such as letting agencies and the internet. We have seen from other similar campaigns that HMRC will use such information to impose much heavier penalties or even prosecute those who do not come forward voluntarily.’