Capital Gains Tax Late Filing Penalty

EB2006

Hello

I am hoping someone might be able to help. In July 2022 we sold a property that had been on the market since 2017. Initially our accountant had advised that there would be no CGT to pay, as it had been our primary residence for a number of years. On selling the property, we received no advice from any party - estate agent, conveyancer or our accountant. 

On preparing my self assessment in December 2023, my accountant determines that CGT is actually due, so got a bit of a shock. Finally got over it, and submitted my return & set up a payment schedule. 

Then in September 2024, I received a fine for late filing. £100, a 6 month fine for £714 and a 12 month fine for £714. Circa £1,500 in total. 

This was an innocent mistake on my part & I feel that this process is hugely unreasonable. I wasn’t trying to get out of anything, I simply wasn’t given the advice required. This process effects/ fines people differently, purely dependent on the time between sale of the property & self assessment submission. Which surely can’t be right. 

I understand the paying of interest, but sending 3 fines over at once, when I haven’t had the opportunity to respond to the first one, seems outrageous. It’s for the filing in of a form!

Any advice would be greatly received.

user1977

Pay up, if appropriate claim from the accountants if they gave you the misleading advice, next time seek better advice. HMRC aren't likely to know/care whether it's an "innocent" mistake or a "guilty" one.

theartfullodger

Pay up.  Ignorance/innocence (not bothering with education/training) is no excuse, just as speeding fines also apply to those who "didn't know" about the limits.

Best wishes to all 

p00hsticks

The estate agent or conveyancer isn't going to know anything about your tax affairs so it's not really anything to do with them. You might have a case against your accountant if you asked them at the time and they categorically told you that no CGT would be due.

But the bottom line is that it's the person who is selling the property whose responsibility it is to determine whether any CGT is owed and pay it within 60 days of completion. 

AskAsk

as others have said, it is down to you to find out if CGT is liable and submission done.  Solicitors should really tell everyone as standard to look into report CGT if appropriate but they never do this so it is left to you to find out.

if you had asked your accountant and he said there was no liability, if you have that in writing then you can claim the costs back from him.  if he did your self assessment for you and didn't declare the sale of the property, then that in itself is incorrect and so he would be liable for re-imbursing you as you need to declare sale of assets in your self assessment unless it was your primary residence and had been so for the entire period of ownership.

count yourself lucky it isn't a higher bill!

saajan_12

EB2006 said:

Hello

I am hoping someone might be able to help. In July 2022 we sold a property that had been on the market since 2017. Initially our accountant had advised that there would be no CGT to pay, as it had been our primary residence for a number of years. On selling the property, we received no advice from any party - estate agent, conveyancer or our accountant. 

The conveyancer and estate agent are irrelevant, its not their job to provide tax advice. The accountant is more concerning - depending on the scope of what they were supposed to do, you might have a claim from them for poor / incorrect advice which you relied on. However when did you ask? Given the extended time on the market, the situation may have changed if the time you were not living there increased above 9 months, making you liable in 2022 when you may not have been before. 

EB2006 said:

On preparing my self assessment in December 2023, my accountant determines that CGT is actually due, so got a bit of a shock. Finally got over it, and submitted my return & set up a payment schedule. 

Then in September 2024, I received a fine for late filing. £100, a 6 month fine for £714 and a 12 month fine for £714. Circa £1,500 in total.

Correct.
- CGT is due on a residential property if you haven't been resident for the full period of ownership, albeit with some further allowances.
- CGT is payable 2 months after completion of the sale, ie September 2022.
- The standard HMRC penalty is 5% after 6 months and a further 5% after 12 months. There may also be interest due. 

EB2006 said:

This was an innocent mistake on my part & I feel that this process is hugely unreasonable. I wasn’t trying to get out of anything, I simply wasn’t given the advice required. This process effects/ fines people differently, purely dependent on the time between sale of the property & self assessment submission. Which surely can’t be right. 

I understand the paying of interest, but sending 3 fines over at once, when I haven’t had the opportunity to respond to the first one, seems outrageous. It’s for the filing in of a form!

Any advice would be greatly received.

Its intended to be a penalty, to incentivise payment on time and save additional costs for HMRC to chase payment. Otherwise if just paying the interest then people could intentionally pay late to help their cashflow and avoid getting a loan. You're expected to know or research tax law, the same was as any other law. This is all readily available on the HMRC website. The penalty is for being 12 months late which you were.. they can't send the interim chasers earlier if you never declared you had realised a gain.