heatwaver22

heatwaver22

CGT problem. Please give me advice.

I have been contacted by HMRC with regard to a holiday home I sold in 2005. I purchased the property in July 1993 for £23,000 and sold it in November 2005 for £105,000. I had no idea about CGT being payable until I received the letter from HMRC - although I do realise that my ignorance is my problem.

I have not worked since 1998 because of a health problem. I am a pensioner and my only income is the state pension.
I have savings amounting to £23,000 in total, which I have put away for my old age and for living expenses for the rest of my life.

HMRC have requested CGT of £12,664 (apparently the lowest rate payable), plus a penalty for non payment of £2,533 and an additional sum of £2,988 for interest on the lump sum. Therefore a total sum of £18,185, if I pay in full by 31 August 2014.

I am at my wit's end!! If I do pay all this money then I shall have nothing to live off. I will never be able to save or earn again and will definitely need new household items before I die.

Please advise me as to what I could do to retain my life savings.

Thank you in advance.

antonic

Write to them explain your circumstances ( and provide evidence if requested of your medical problems) and ask for a repayment arrangement to pay what is due.

If you request such an arrangement (and it is granted) you must be willing to provide all relevant information that HMRC request, such as details if your income & expenditure.

If you request such an arrangement I would suggest that you :

1) Make an offer that you KNOW you can stick to and

2) Enclose a payment with the request, the amount you decide, but by enclosing a payment you are showing that you recognise that there is a debt to be paid and you want to pay it - albeit in instalments and most importantly

3) Post the details of the calculation on here, so we can check if its right (remove all identifiable details first).

xylophone

Have you looked into pension credit?

http://www.ageuk.org.uk/Documents/EN-GB/Factsheets/FS48_Pension_Credit_fcs.pdf?dtrk=true

purdyoaten

antonic wrote: »

Write to them explain your circumstances ( and provide evidence if requested of your medical problems) and ask for a repayment arrangement to pay what is due.

If you request such an arrangement (and it is granted) you must be willing to provide all relevant information that HMRC request, such as details if your income & expenditure.

If you request such an arrangement I would suggest that you :

1) Make an offer that you KNOW you can stick to and

2) Enclose a payment with the request, the amount you decide, but by enclosing a payment you are showing that you recognise that there is a debt to be paid and you want to pay it - albeit in instalments and most importantly

3) Post the details of the calculation on here, so we can check if its right (remove all identifiable details first).

Not sure about the wisom of sending any money at this stage especially as op states that only income is state pension (pension credit should be looked at as xylophone says). There would appear to be no real possibility that this debt would ever be repaid.

Back in my days in HMRC there were concessions where a taxpayer could have some or all of the debt written off if extreme hardship would be experienced - I really have no idea whether they still exist and in what format but this should be explored with an experienced tax advisor.

Perhaps some more recent HMRC employees would have a better idea?

antonic

purdyoaten wrote: »

Not sure about the wisom of sending any money at this stage especially as op states that only income is state pension (pension credit should be looked at as xylophone says). There would appear to be no real possibility that this debt would ever be repaid.

Back in my days in HMRC there were concessions where a taxpayer could have some or all of the debt written off if extreme hardship would be experienced - I really have no idea whether they still exist and in what format but this should be explored with an experienced tax advisor.

Perhaps some more recent HMRC employees would have a better idea?

HMRC do not routinely remit debts , they have to have conclusive evidence that the debt cant be paid, but they would expect SOME payment to be made.

HMRC employees wont post on here openly as a HMRC employee because, from what I know to do so would break HMRC`s social media policy and could lead to disciplinary for the employee.

purdyoaten

antonic wrote: »

HMRC do not routinely remit debts , they have to have conclusive evidence that the debt cant be paid, but they would expect SOME payment to be made.

HMRC employees wont post on here openly as a HMRC employee because, from what I know to do so would break HMRC`s social media policy and could lead to disciplinary for the employee.

When I meant 'more recent' I did not necessarily mean current. I am aware that there are a few ex-HMRC on here like myself. . Also, nowhere did I suggest that HMRC routinely write-off debts.

Nevertheless it is still done - see the following interesting article:

http://www.telegraph.co.uk/finance/9362799/HMRC-wrote-off-more-than-5-billion-in-uncollected-tax.html


The 2011/12 total of £5.17 billion in write-offs and remittances - debts which have been dropped because they are too small to be worth pursuing or would cause hardship if collected -

I remember an occasion when I completely wrote off a debt of a widow who, with her late husband, had failed to declare any rental income for the previous ten years or so. This only came to light at the time of his death. The reason was 'hardship'. However, this was many years ago and I am sure that the rules have altered many times since.

purdyoaten

A further point - the op really needs to contact a tax specialist urgently. All is not lost on this but it needs to go well beyond the op speaking to an HMRC employee who simply has instructions to collect the debt in whetever way they can.

heatwaver22

Thanks to those who replied previously.
I sold my second home in 2005 and have just been asked by HMRC to pay CGT, made up as follows:-
Capital gains tax due - £12,664
Interest due - £ 2,988
Penalty due - £ 2,533 TOTAL = £18,185.

I have about £18,000 in savings and have not worked since 1998 due to health reasons. I am now a pensioner and my only income is the state pension. HMRC say this debt MUST be repaid within 3 years and that interest will continue to accrue until paid in full.
Can they take all my life savings, which I have put by for care in my old age? It would totally clear me out of money. What would happen if I spend all my savings and had nothing left (knowing as I do that the CGT is due)? They have sent a form asking for all my bank accounts, savings and premium bonds, car, mortgage endowment etc. I am at my wits end with them. I now know that CGT is due, but had never heard of it before. I have tried very hard to save for my older years and now it seems I have to be penniless.:(

TBagpuss

The problem I think you will have in claiming hardship is that you do, in fact, have the money - you have savings, so you can afford to pay.

Once you have done so, you will no longer have that cushion of savings, but you may become eligable for help by way of pension tax credits.

As you say hat you have not been able to work since 1998 and sold the second home in 2005 presumably the money you have 'saved' is in fact what is left of the sale proceeds from the house? if so, it could be argued that you have not saved it all all, you're simply paying it later than you should have.

If you have a specific, current need (as opposed to a potential future need) hen it may be possible for you to raise that as a hardship issue, but I think you will struggle to claim hardship when you have sufficient money sitting in the bank to pay your debt.

purdyoaten

heatwaver22 wrote: »

Thanks to those who replied previously.
I sold my second home in 2005 and have just been asked by HMRC to pay CGT, made up as follows:-
Capital gains tax due - £12,664
Interest due - £ 2,988
Penalty due - £ 2,533 TOTAL = £18,185.

I have about £18,000 in savings and have not worked since 1998 due to health reasons. I am now a pensioner and my only income is the state pension. HMRC say this debt MUST be repaid within 3 years and that interest will continue to accrue until paid in full.
Can they take all my life savings, which I have put by for care in my old age? It would totally clear me out of money. What would happen if I spend all my savings and had nothing left (knowing as I do that the CGT is due)? They have sent a form asking for all my bank accounts, savings and premium bonds, car, mortgage endowment etc. I am at my wits end with them. I now know that CGT is due, but had never heard of it before. I have tried very hard to save for my older years and now it seems I have to be penniless.:(

A very difficult situation - I genuinely have great sympathy. Personally I would seek the advice of CAB on this or seek the assistance of one of the debt charities. (Is this appropriate for the Debt-free Wannabee board on this site?)

On the income front - are you claiming everything that you are entitled to? Are you not due pension credit or attendance allowance (the latter would also serve to increase the former). Obviously the amount does depend on the amount of state pension received.

Try here:

http://www.entitledto.co.uk/

You might be surprised!

Good Luck!

antonic

As you are asking for a repayment arrangement to repay the amount due then HMRC have a duty to request the information that they have asked for.

If you dont provide it then HMRC *could* turn round and start enforcement proceedings because there is a debt due.

You need to remove from your mind the thought that as a pensioner you deserve special treatment , you dont because there is a debt that needs to be paid - also they are giving the option to pay over 3 years and not demanding payment in full which you admit you can do.

To reduce the interest that needs to be paid why not make a lump sump payment immediately and negotiate a repayment plan for the balance ?.

You can approach the debt charities for help, but HMRC wont necessarily listen to them.