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

hearts

PasturesNew wrote: »

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.

Hmmm I wonder about this. Isn't there client privilege?

nelly_2

Personally not paying tax is helping the government stop wasteing money

If he does pay it all he'll get is a new mini roundabout and a pile of speed humps up his street

kennyboy66_2

hearts wrote: »

Hmmm I wonder about this. Isn't there client privilege?

I am pretty sure the proceeds of crime act obliges solicitors to report to the National Criminal Intelligence Service any suspicion that some assets result from tax evasion or social security. It can be a criminal offence not to report.

This extends to divorce cases were parties are obliged to disclose assets & it comes to light that tax has been evaded.

Anti money laundering legislation is similar.

There is no difference in my book between tax evasion & benefit fraud.

RabbitMad

PasturesNew wrote: »

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.

Stamp duty yes as its a flat rate for all based upon sale price, but in most other residential property transactions there is PPR relief against capital gains tax, on top of that the client might not be a tax payer, they have their annual cgt allowance etc so how could the solicitor know whether any cgt was payable.

As GG said there is unlikely to be a huge tax liabilty on a 90K sale anyway so with all the posible reliefs, allowances ad avoidance loopholes it might not be tax evasion anyway.

Personally I think the OP should post the figures so we can work out whether there is a liability and give opinions on how to avoid it rather than evade it.

EdInvestor

It's quite difficult to be liable to much CGT on sale of a property that has been let, if you used to live in it.

A straight BTL or second home is different, especially if the gain is large and the property hasn't been owned for long.

Br0ad0ak2

just over two years ago we decided to move house and found the exactly the house we wanted. We were in a position to move into the new house before selling the old one. In fact it has taken two years to sell, during which time is has been empty except for our occasional night stays to make the house look 'lived in'.

Our solicitor now tells us that because the house was empty for two years, it was not our ppr and therefore it will be subject to CGT. Can this be right? It was never intended to be an investment and, if we'd known how long it would be empty, we would have let it out.

Br0ad0ak2

Leighthal

Br0ad0ak2 wrote: »

just over two years ago we decided to move house and found the exactly the house we wanted. We were in a position to move into the new house before selling the old one. In fact it has taken two years to sell, during which time is has been empty except for our occasional night stays to make the house look 'lived in'.

Our solicitor now tells us that because the house was empty for two years, it was not our ppr and therefore it will be subject to CGT. Can this be right? It was never intended to be an investment and, if we'd known how long it would be empty, we would have let it out.

Br0ad0ak2

I always thought it was three years?

seven-day-weekend

We went to live in Spain in September 2004.

In September 2005, we sold our investment property in the UK. We paid £35000 for it in 1997 and sold it for £85000. It had never been our main home.

When I rang to ask the taxman what we should do about this, we were told that because we had sold it when we were Spanish residents, then providing we remained Spanish residents until after 6th April 2009, we needn't declare the sale or pay any CGT.:beer:

We were going to stay resident in Spain until about that time or a bit later anyway, but it's quite exciting to think of ourselves as tax exiles!:rotfl:

HugoSP

epz wrote: »

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.

From the tax advice that we have been given over the possible disposal of one property....

10 years would gain taper relief, so the first 40% of the gain would be disregarded. Hence HMRC are thus looking at a gain of some £12k.

Deduct from that the costs of buying, selling and any moneys spent on it (unless these have been offset against rental income etc), and then they each have their current CGT allowance (c£9k each)

So they are probably not due to pay any tax anyway, unless they have used their CGT somewhere else.

If HMRC saw a gain of 20K over 10 years whilst trawling though, I suspect they would put it on the "not likely to yield any revenue" pile.

The OPs mate looking at a gain of 90k IMO should take financial advice from a tax acountant. Especially if you are self employed it will not do to evade tax in this area, he could end up facing an investigation that could cost him the tax that he is trying to evade, then he would have to pay it anyway!

Br0ad0ak2

the tax man might normally ignore small amounts of CGT liability but, if you have named a solicitor in your will as an executor, they'll definitely want to stick to the letter of the law.