HMRC turns a blind eye to low value 2nd home sales?

jonboy_2

Hi folks,

I was wondering what you guys make of this: A mate of mine has been advised by his solicitor, "off the record", to not declare his 90k house sale to the HMRC, even though it's not his prime residence and would therefore be liable for Capital Gains Tax.

Apparently, his solicitor reckons there's only a very small chance that HMRC would investigate a non declaration over such a small amount and, even if they did, he says my mate could just claim ignorance of the tax rules and pay the tax due without a penalty.

I'm not an expert on property, but I would have thought HMRC would find out every time a house sale is made, making it impossible to avoid CGT, even if 90k is a tiny amout in property terms. Also, I always thought ignorance of the law is never a defence, so he could get into serious trouble, couldn't he?

Has my mate been badly advised by his "off the record" solicitor?

Thanks for any opinions.

RabbitMad

Your mate's solicitor is probably correct. Whether thats good advice is another matter.

How much did the guy buy the property for, how longs he owned it and has he at anytime had it as his main residence - maybe he lived in it for a couple of weeks when his missus and him seperated, only for her to welcome him back with open arms before he had time to change everything over ;-)

It is your mates duty to let HMRC know that he has a liabilty and as his sols says he could plead ignorance and hope they treat him lightly.

He should calculate the gain and then the tax to pay. It might be that his liability is so small he feels more comfortable paying it.

Get him to post his details here - I'm sure we could calculate his liability and he can then decide himself whether to take the risk.

epz_2

about 7 years back my folks did the same on a holiday home, basicly they made 20k over ten years and went there often, sometimes every weekend, sold it and pocketed the cash.

frankly i wouldnt want to be the tax man trying to prove a couple hadnt separated etc and someone been actually living there for the sake of taxing 20k, if you were renting then they may have you but thems the breaks.

fyi i know nothing about tax so please only take this as anicdotal agreement.

Alan_M_2

I would imagine those homes that fall under the stamp duty threshold would be less likely to be investigated for a number of reasons. So whilst the solicitor is actually giving poor (even though it's off the record) advice. He's probably right.

My solicitor would usually make a throw away comment of this nature followed by "But of course I couldn't possibly advise you to take that course of action" etc etc.

earwigjuice

to my knowledge, if he gets caught they will ask initially for the amount due to them plus a small interest. however if the suspect he intentionally mislead them they can impose a fine of up to 30%. probably worth the risk if he keeps the money somewhere for a couple of years

poppy10_2

It's fraud, and he could be arrested. Simple as that. If the solicitor is confident he is giving the right advice, tell him to say that "on the record"

Guy_Montag

Interesting that a thread was recently removed from the benefits forum when someone asked if there was a legal way to hide or dispose of assets to improve your chance of getting benefits, because, I presume, it was deemed to encourage fraud. Then what happens here...?

amcluesent

We're all living in the hell-hole that is Brown's tax'n'bungle Britain, anything that keeps a few pennies earned by hard-working wage-slaves away from the rapacious taxman has to be :beer:. Lets be honest, without some 'on the black' noone except Russian billionaires can survive under Brown's tax until the pips squeeze regime of pauperising the middle-classes to transfer wealth to 'his people'.

Guy_Montag

amcluesent wrote: »

We're all living in the hell-hole that is Brown's tax'n'bungle Britain, anything that keeps a few pennies earned by hard-working wage-slaves away from the rapacious taxman has to be :beer:. Lets be honest, without some 'on the black' noone except Russian billionaires can survive under Brown's tax until the pips squeeze regime of pauperising the middle-classes to transfer wealth to 'his people'.

Capital gains due to HPI are hardly "hard earned cash"

Gorgeous_George

Making light of tax evasion? Whatever next?

It is the same as benefit fraud.

There is unlikely to be much a tax liability on a £90K sale. Especially after all of the legal tax avoidance scams are employed. What are the figures/dates?

GG

PasturesNew

I thought a solicitor had a duty to inform Mr Tax Man if you were trying to avoid, say, stamp duty by any means.... so I'd have thought they'd have had the same legal duty in all tax/property matters.

Odd advice.

I think I'd be too scared to do it myself. I'm such a law abiding person .... from fear of being caught.