capital gains tax - who to tell?

gibby4

Hi

I am selling my 2nd home and will make a capital gain -£50k. Who do I tell? If I dont tell anyone what could the consequences be? How does the Ir usually find out?The sale proceeds will be gifted to a family member so not in my bank account

WHA

You have to tell the HM Revenue & Customs - best to phone the local office (under tax in the phone book) or get contact details from their website https://www.hmrc.gov.uk. Tell them what you've done and they'll send a self assessment tax return for the year it happened. If you have sold it around now (i.e. after 5 April 2006), it will need declaring on your 2006/7 self assessment tax return which would be sent to you shortly after 5/4/07 and needs to be completed and submitted by 31/1/08, which is also the date the capital gains tax needs to be paid.

I would suggest you ask an accountant or tax adviser to look over your figures or to do the tax return for you - remember it is "self" assessment so the onus is on you to complete the form, calculate and pay the tax yourself. A bit of professional advice may save a bit of tax as there are sometimes reliefs and allowances that can be claimed. Though the HMRC website does have quite detailed guidance notes to help you.

Not declaring it would be a criminal offence of tax evasion. I think prosecution would be unlikely in view of the amount of tax, but you could certainly face fines and penalties of the amount of tax at stake - effectively doubling the amount you have to pay, plus interest. Property transactions are a matter of public record - stamp duty is administered by HMRC themselves - HMRC tax investigators do trawl through property transactions to look for those who aren't declaring property transactions. You are VERY likely to get caught if you don't tell them yourself!