Capital Gains tax on 2nd home - dispute with HMRC

saajan_12

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).

Ah fair point, I read that as the accountant only beign made aware of the rule changes, given OP also mentions HMRC should make them aware. 

Grumpy_chap

Something seems very odd here - that the Solicitor and the Accountant both claim not to have been aware that the requirement was for CGT to be reported and paid within 30 days of the sale.

It could be, as Sheramber suggests, that the Accountant was simply not made aware of the sale by the OP until the Accountant was preparing the OP's Tax Return for the year.  The Accountant cannot be liable for late submission if it is something they had no knowledge about.
If the Accountant did know about the sale and did not advise the OP about timely CGT filing and payment, there may be a case against the Accountant (who has PI cover).

The Solicitor really should have known and advised the OP accordingly with regard to timescales.  If the Solicitor did not know, there may be a case against the Solicitor (who also has PI cover in place).  However, the devil could be in the detail.  If the Solicitor was aware that this was a second property (not the OP's PPR) and commented to the OP that CGT would arise and needed to be reported and paid within the appropriate timescales and the OP responded along the lines of being aware and would arrange for the Accountant to manage the declarations, the Solicitor could also be in the clear.

I assume the OP is not disputing the amount of the actual CGT to be paid.
There should be no further interest accruing as the OP should have paid the CGT as soon as the payment was declared (via Tax Return).
The extra costs here seems to be the late filing penalties (£100 + £300 + £300 ?) plus the interest from the date the CGT should have been paid (within 30 days from sale) until the date when the CGT was paid (reported) via Tax Return.
That would be the most that either the Solicitor or the Accountant could be liable for if poor / absent advice was given.

Can the OP share more detail about why the Solicitor and the Accountant are stating the late filing / payment of CGT is not their liability?
For both the Solicitor and the Accountant to claim they "did not know" about the rules - particularly not even a recent rule change - for a basic element of their everyday works seems like an admission of incompetence.  It would be highly unusual to encounter both a Solicitor and an Accountant unaware of the timescales applying.  For that reason, I have to ask "is there something more here that is not being shared?"

Nomunnofun1

saajan_12 said:

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).

Ah fair point, I read that as the accountant only beign made aware of the rule changes, given OP also mentions HMRC should make them aware. 

To be fair to you you did ask this question on your first post!

sheramber

Possibly

Property sold  'last spring' so presumably reported on 23/24 tax return and payment made by 31 January 25.

Presumably, HMRC now charging interest on unpaid CGT  from 60 days after sale until 31 January 25.

plus  penalties for non payment.

Nomunnofun1

Grumpy_chap said:

Something seems very odd here - that the Solicitor and the Accountant both claim not to have been aware that the requirement was for CGT to be reported and paid within 30 days of the sale.

It could be, as Sheramber suggests, that the Accountant was simply not made aware of the sale by the OP until the Accountant was preparing the OP's Tax Return for the year.  The Accountant cannot be liable for late submission if it is something they had no knowledge about.
If the Accountant did know about the sale and did not advise the OP about timely CGT filing and payment, there may be a case against the Accountant (who has PI cover).

The Solicitor really should have known and advised the OP accordingly with regard to timescales.  If the Solicitor did not know, there may be a case against the Solicitor (who also has PI cover in place).  However, the devil could be in the detail.  If the Solicitor was aware that this was a second property (not the OP's PPR) and commented to the OP that CGT would arise and needed to be reported and paid within the appropriate timescales and the OP responded along the lines of being aware and would arrange for the Accountant to manage the declarations, the Solicitor could also be in the clear.

I assume the OP is not disputing the amount of the actual CGT to be paid.
There should be no further interest accruing as the OP should have paid the CGT as soon as the payment was declared (via Tax Return).
The extra costs here seems to be the late filing penalties (£100 + £300 + £300 ?) plus the interest from the date the CGT should have been paid (within 30 days from sale) until the date when the CGT was paid (reported) via Tax Return.
That would be the most that either the Solicitor or the Accountant could be liable for if poor / absent advice was given.

Can the OP share more detail about why the Solicitor and the Accountant are stating the late filing / payment of CGT is not their liability?
For both the Solicitor and the Accountant to claim they "did not know" about the rules - particularly not even a recent rule change - for a basic element of their everyday works seems like an admission of incompetence.  It would be highly unusual to encounter both a Solicitor and an Accountant unaware of the timescales applying.  For that reason, I have to ask "is there something more here that is not being shared?"

Hard to disagree with any of that but, in over forty years of experience I have never come across a solicitor who dealt with any aspect of capital gains or even offered advice in that regard. This is most prevalent in divorce situations - recently we had someone on here who received £25000 when the marital home was eventually sold and a capital gains bill of around three times that figure (from memory). 

Grumpy_chap

Nomunnofun1 said:

Grumpy_chap said:

Something seems very odd here - that the Solicitor and the Accountant both claim not to have been aware that the requirement was for CGT to be reported and paid within 30 days of the sale.

It could be, as Sheramber suggests, that the Accountant was simply not made aware of the sale by the OP until the Accountant was preparing the OP's Tax Return for the year.  The Accountant cannot be liable for late submission if it is something they had no knowledge about.
If the Accountant did know about the sale and did not advise the OP about timely CGT filing and payment, there may be a case against the Accountant (who has PI cover).

The Solicitor really should have known and advised the OP accordingly with regard to timescales.  If the Solicitor did not know, there may be a case against the Solicitor (who also has PI cover in place).  However, the devil could be in the detail.  If the Solicitor was aware that this was a second property (not the OP's PPR) and commented to the OP that CGT would arise and needed to be reported and paid within the appropriate timescales and the OP responded along the lines of being aware and would arrange for the Accountant to manage the declarations, the Solicitor could also be in the clear.

I assume the OP is not disputing the amount of the actual CGT to be paid.
There should be no further interest accruing as the OP should have paid the CGT as soon as the payment was declared (via Tax Return).
The extra costs here seems to be the late filing penalties (£100 + £300 + £300 ?) plus the interest from the date the CGT should have been paid (within 30 days from sale) until the date when the CGT was paid (reported) via Tax Return.
That would be the most that either the Solicitor or the Accountant could be liable for if poor / absent advice was given.

Can the OP share more detail about why the Solicitor and the Accountant are stating the late filing / payment of CGT is not their liability?
For both the Solicitor and the Accountant to claim they "did not know" about the rules - particularly not even a recent rule change - for a basic element of their everyday works seems like an admission of incompetence.  It would be highly unusual to encounter both a Solicitor and an Accountant unaware of the timescales applying.  For that reason, I have to ask "is there something more here that is not being shared?"

Hard to disagree with any of that but, in over forty years of experience I have never come across a solicitor who dealt with any aspect of capital gains or even offered advice in that regard. This is most prevalent in divorce situations - recently we had someone on here who received £25000 when the marital home was eventually sold and a capital gains bill of around three times that figure (from memory). 

I would expect an experienced Conveyancing Solicitor to be aware whether a property being sold is PPR or second property and, if the latter, to be aware that CGT may apply and to bring that to their Client's attention.
I agree that calculating the CGT liability is not a regular feature of a Conveyancing Solicitor's function (unlike SDLT).
If the Conveyancing Solicitor advised the OP that CGT is a consideration and the OP responded that they would make the necessary arrangements via their Accountant, then the Conveyancing Solicitor has discharged their professional obligations and has the expectation that the OP is seeking the necessary and appropriate professional advice with regard to CGT from the Accountant.

This then becomes a matter of when did the OP inform the Accountant of the sale?

Sarahspangles

How are HMRC notified about the sale of a property in order to follow up unpaid CGT? If you had given an old address as the correspondence address on whatever system holds that record, and that persisted, it’s understandable they’d write there.

It’s a long time since I worked in Local Government but I recall that people were often confused about ‘walls’ between bits of Government and its agencies. For example between Council Tax and Electoral Roll and Land Registry and HMRC.

DRS1

A conveyancing solicitor will almost certainly tell you that it is not their job to advise on any tax considerations and that will probably be spelt out in their terms of engagement.

Bookworm105

Sarahspangles said:

How are HMRC notified about the sale of a property in order to follow up unpaid CGT? If you had given an old address as the correspondence address on whatever system holds that record, and that persisted, it’s understandable they’d write there.

It’s a long time since I worked in Local Government but I recall that people were often confused about ‘walls’ between bits of Government and its agencies. For example between Council Tax and Electoral Roll and Land Registry and HMRC.

Land Registry report sales to HMRC
it is then, as you say, a question of what address HMRC has. But that does not resolve whether the accountant failed to advise tax "in time" or whether the OP failed to advise accountant of the sale when it happened.

Sarahspangles

Bookworm105 said:

Sarahspangles said:

How are HMRC notified about the sale of a property in order to follow up unpaid CGT? If you had given an old address as the correspondence address on whatever system holds that record, and that persisted, it’s understandable they’d write there.

It’s a long time since I worked in Local Government but I recall that people were often confused about ‘walls’ between bits of Government and its agencies. For example between Council Tax and Electoral Roll and Land Registry and HMRC.

Land Registry report sales to HMRC
it is then, as you say, a question of what address HMRC has. But that does not resolve whether the accountant failed to advise tax "in time" or whether the OP failed to advise accountant of the sale when it happened.

Land Registry hold a registered owners’ contact address - this is what’s used for notification about possible property fraud. How would HMRC join that up with the OP’s current address for tax purposes?