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Unfair Capital Gains Tax Bill
DibbeeG
Posts: 7 Forumite
Hi all, really hope you can help me.
My father bought a second property 10 years ago which he was renting out until he sold it to me 2 years ago.
In that time the value of the property rose from £250k to £420k. He was expecting to pay capital gains tax based on the increased value of £170k (he sold it to me at the price he bought it at: £250k).
However HMRC are insisting that at the time of sale to me, the property was worth £540k. They have not sent out someone to value the property! Instead they are using the most recent sale on my road, which is a property around 50% larger than my house. This is the only other property that has been sold on my road in the last 5 years.
We've sent photos to HMRC comparing the two properties to highlight how different they are, but they are refusing to budge on their valuation of £540k. Their justification is that this is how they do things (looking at nearby recent sales).
We have even sent HMRC the valuation report carried out by my building society before we remortgaged last month where it states the property is now worth £415k.
But they aren't taking any of that into consideration, or even sending an independent surveyor to value the property themselves.
We're really stuck on what to do. The tax was due to be paid by January 2019, and because it hasn't paid (as my dad is contesting it) they have added on a fine for late payment. But the difference is so big that it doubles the tax bill..
It feels really unfair... we want to pay the capital gains tax but not to the value they are basing it on.
Does anyone have any advice? We're all out of ideas
My father bought a second property 10 years ago which he was renting out until he sold it to me 2 years ago.
In that time the value of the property rose from £250k to £420k. He was expecting to pay capital gains tax based on the increased value of £170k (he sold it to me at the price he bought it at: £250k).
However HMRC are insisting that at the time of sale to me, the property was worth £540k. They have not sent out someone to value the property! Instead they are using the most recent sale on my road, which is a property around 50% larger than my house. This is the only other property that has been sold on my road in the last 5 years.
We've sent photos to HMRC comparing the two properties to highlight how different they are, but they are refusing to budge on their valuation of £540k. Their justification is that this is how they do things (looking at nearby recent sales).
We have even sent HMRC the valuation report carried out by my building society before we remortgaged last month where it states the property is now worth £415k.
But they aren't taking any of that into consideration, or even sending an independent surveyor to value the property themselves.
We're really stuck on what to do. The tax was due to be paid by January 2019, and because it hasn't paid (as my dad is contesting it) they have added on a fine for late payment. But the difference is so big that it doubles the tax bill..
It feels really unfair... we want to pay the capital gains tax but not to the value they are basing it on.
Does anyone have any advice? We're all out of ideas
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Comments
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What value did the RICS qualified valuer that you employed at the time give for the property when you purchased?
This is the only evidence that HMRC are likely to accept.0 -
So how did this dispute arise?
Did he complete his tax return, including details of the transaction with the values as you believe them to be, submit this return and pay the tax you believe to be due by 31 January 2019?
And HMRC have now opened an enquiry into this return?
This may well be an occasion on which professional tax advice would be worth paying for. You’d want to find someone who has specific experience negotiating with HMRC on this specific valuation point, which may rule out smaller local firms. But with this amount of tax at stake it may be worth considering.0 -
What value did the RICS qualified solicitor that you employed at the time give for the property when you purchased?
This is the only evidence that HMRC are likely to accept.
At the time of purchase the house was valued at £420k by a surveyor that Nationwide sent. But when I rang Nationwide to ask them to send me that valuation report from 2 years ago, the value on it was £250k (they took the lowest out of the sell price and the market value). They said they don't have any documentation they can send me which states the £420k valuation. The only thing they had was the surveyors report from last month which stated £415k (Value dropped by £5k.0 -
He can instruct a surveyor now to provide a retrospective valuation.0
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Yellow_mango wrote: »So how did this dispute arise?
Did he complete his tax return, including details of the transaction with the values as you believe them to be, submit this return and pay the tax you believe to be due by 31 January 2019?
And HMRC have now opened an enquiry into this return?
Yes that's correct. They don't agree with his values.0 -
As davidmcn above has mentioned, your father should submit an appeal. This needs to be submitted within 30 days of any decision being made unless there is reasonable excuse for not doing so.
At that point he can ask them to consider any additional information that may be relevant. If they remain unmoved on their position, you can apply to the tribunal.
Have HMRC given reasons as to why they disbelieve the retrospective valuation figure?0 -
I think you have mistook mortgage valuation for a surveyors valuation.
You will have to pay for that so well worth the cost. As in probate values an RICS is one that most government bodies recognise0
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