Capital Gains tax on 2nd home - dispute with HMRC

eskbanker

splitscreenvan said:

The GDPR thing I will push as hard as I can as a point of principal. I ran a business until recently, if we had done this the penalties would have been significant

Are you referring to sanctions imposed by the ICO? I thought that they'd only take meaningful enforcement action for repeated and egregious personal data misuse rather than this sort of thing, which would typically be seen as much further down the scale....

mybestattempt

splitscreenvan said:

It sounds as though the general opinion is that we're going to lose this appeal. I do feel it's unreasonable to expect members of the public to keep track of changes to tax law in this manner, but thats almost certainly what the law will state.

The GDPR thing I will push as hard as I can as a point of principal. I ran a business until recently, if we had done this the penalties would have been significant and a customer could have very reasonably expected compensation had we treat their data so frivolously. 

For the record, there is no doubt our details were up to date with HMRC. Both myself and my wife have filed and paid our tax returns on time without fail our entire lives (I'm in my 50s, so I have a track record). 

I too think an appeal would fail on reasonable excuse grounds alone.

However, if the appeal went to tribunal before anything else is considered the onus is on HMRC to prove the penalty was validly issued. That means they sent it to the correct address and you seem to be sure that was not the case so I would suggest you continue with the appeal and pursue that aspect.

Hoenir

splitscreenvan said:

It sounds as though the general opinion is that we're going to lose this appeal. I do feel it's unreasonable to expect members of the public to keep track of changes to tax law in this manner, but thats almost certainly what the law will state.

It's reasonable to check the current situation when undertaking a transaction though. As allowances, tax rates etc could all have changed.  With the advent of the internet and online resource.  A straightforward task. As there's an easy to follow guides for lay people. 

https://www.gov.uk/tax-sell-property

As for your accountant. Hopefully they attend budget briefings to keep themselves fully informed of changing legislation and maintain their professional training record. 

saajan_12

splitscreenvan said:

 If we try to call HMRC they acknowledge the appeal but say it was our responsibility to be aware of the tax rules - this doesn't seem reasonable given our past history of paying on time, and their own error, and the fact neither our solicitor or accountant were aware - I'm not suggesting they needed to run adverts on the TV for this change but surely the industry professionals should be kept up to date? 

I genuinely don't know what to do now. Should I wait it out? Or should we pay to stop the interest building? I can't help but feel if we pay that will be the end of it in terms of us getting any money back.

The GDPR thing is particularly galling, if it was a private company treating customer data like this they'd be fined mercilessly. 

Any advice, opinions or general musings appreciated!

Kind regards
splitscreenvan

Well yes, but surely you'd expect accountants to follow such changes - that's a failing of the accountant, not of HMRC. Still not sure what timeframe we're talking about vs the rule changes, but as a layman I've known for some time that CGT for property is soon after the gain not at the end of the tax year.. so HMRC must have publicised it somehow. 

Dazed_and_C0nfused

splitscreenvan said:

Hi Folks. 

I wonder if anyone can advise the best approach to a rather unique issue (or at least I think it is).

We had a 2nd home for a few years, we bought it, did a load of renovations, then we let it out as an Airbnb for a while, before selling it in the spring of last year. We assumed that we would declare the capital gain on our tax return as normal and pay accordingly.

Apparently however the rules changed in April 2020 and from that date you had to pay any cgt on a 2nd home within 30 days (this was extended to 60 days in Oct 2021).

Unfortunately we had no idea this was the case, more importantly neither did our accountant, or our solicitor, so we didn't pay anything immediately thinking we had months to add this to our tax return. 

We found out when our accountant received notification from HMRC that they had sent me (not my wife) 2 letters and I had ignored them. When I asked to see those letters they had an address on that we hadn't lived in for 17 years (we have in fact moved twice since then). In that 17 years we have paid every single tax bill on time without fail, and have had lots of correspondence with HMRC using our correct address. 

So, we have appealed and filed a complaint under GDPR, I am mighty annoyed that such confidential letters can be sent to such an old address! 

The appeal however is grindingly slow, and we had already ran up interest charges which are increasing by the day. If we try to call HMRC they acknowledge the appeal but say it was our responsibility to be aware of the tax rules - this doesn't seem reasonable given our past history of paying on time, and their own error, and the fact neither our solicitor or accountant were aware - I'm not suggesting they needed to run adverts on the TV for this change but surely the industry professionals should be kept up to date? 

I genuinely don't know what to do now. Should I wait it out? Or should we pay to stop the interest building? I can't help but feel if we pay that will be the end of it in terms of us getting any money back.

The GDPR thing is particularly galling, if it was a private company treating customer data like this they'd be fined mercilessly. 

Any advice, opinions or general musings appreciated!

Kind regards
splitscreenvan

If you have paid the CGT due then why are interest charges still accruing?

I presume you are aware there is no right of appeal against an interest charge, that is effectively commercial restitution to reflect the fact that the money was in your bank account when it should have been in HMRC's.

35har1old

Dazed_and_C0nfused said:

splitscreenvan said:

Hi Folks. 

I wonder if anyone can advise the best approach to a rather unique issue (or at least I think it is).

We had a 2nd home for a few years, we bought it, did a load of renovations, then we let it out as an Airbnb for a while, before selling it in the spring of last year. We assumed that we would declare the capital gain on our tax return as normal and pay accordingly.

Apparently however the rules changed in April 2020 and from that date you had to pay any cgt on a 2nd home within 30 days (this was extended to 60 days in Oct 2021).

Unfortunately we had no idea this was the case, more importantly neither did our accountant, or our solicitor, so we didn't pay anything immediately thinking we had months to add this to our tax return. 

We found out when our accountant received notification from HMRC that they had sent me (not my wife) 2 letters and I had ignored them. When I asked to see those letters they had an address on that we hadn't lived in for 17 years (we have in fact moved twice since then). In that 17 years we have paid every single tax bill on time without fail, and have had lots of correspondence with HMRC using our correct address. 

So, we have appealed and filed a complaint under GDPR, I am mighty annoyed that such confidential letters can be sent to such an old address! 

The appeal however is grindingly slow, and we had already ran up interest charges which are increasing by the day. If we try to call HMRC they acknowledge the appeal but say it was our responsibility to be aware of the tax rules - this doesn't seem reasonable given our past history of paying on time, and their own error, and the fact neither our solicitor or accountant were aware - I'm not suggesting they needed to run adverts on the TV for this change but surely the industry professionals should be kept up to date? 

I genuinely don't know what to do now. Should I wait it out? Or should we pay to stop the interest building? I can't help but feel if we pay that will be the end of it in terms of us getting any money back.

The GDPR thing is particularly galling, if it was a private company treating customer data like this they'd be fined mercilessly. 

Any advice, opinions or general musings appreciated!

Kind regards
splitscreenvan

If you have paid the CGT due then why are interest charges still accruing?

I presume you are aware there is no right of appeal against an interest charge, that is effectively commercial restitution to reflect the fact that the money was in your bank account when it should have been in HMRC's.

The solicitor and accountant are both at fault.
I sold a second house and it was the first thing the solicitor mentioned along with using a accountant to lodge the paper work.
The accountant said even after it being declared and paid it also had to be included in the next self assessment 
The accountant would have needed to approach HMRC who would then have asked you to approve the accountant to act on your behalf.
Was the property owned jointly?
Do both of you fill in self-assessment returns?
Where you aware of CGT allowance for the period when you sold?

 

Bookworm105

saajan_12 said:

Well yes, but surely you'd expect accountants to follow such changes - that's a failing of the accountant, not of HMRC. Still not sure what timeframe we're talking about vs the rule changes, but as a layman I've known for some time that CGT for property is soon after the gain not at the end of the tax year.. so HMRC must have publicised it somehow. 

100% agree
I would also go further and say you should make a formal complaint to their respective professional bodies over individual professional negligence as there really is zero excuse for accountants not to be up to speed with tax rules.  That is why they have membership of professional bodies that promulgate such info with hours of budget announcements.

TheGreenFrog

Assuming your tax accountant is a suitably qualified professional they will have a complaints procedure, which will have been referred to in their engagement terms.  If so you should raise a complaint and follow the procedure under that (including to appeal if you are not saitisfied).  Regulatory bodies generally do not investigate negligence complaints (which is why the complaints procedure is there).  

sheramber

But it appears that the accountant did not know about the sale/CGT until completing the tax return.

Yes, the accountant was only made aware when she was filing my self assessment return (as it included the cgt on the sale of the property).

Nomunnofun1

sheramber said:

But it appears that the accountant did not know about the sale/CGT until completing the tax return.

Yes, the accountant was only made aware when she was filing my self assessment return (as it included the cgt on the sale of the property).

Now there’s a point!

When was the accountant made aware of the sale?