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Are Solicitors and Estate Agents aware of CGT ?

Are Solicitors and Estate Agents aware of 30 day deadline to pay CGT if due?

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Two incidents this year.

Client A . Records for SA100  2019-20 recieved January 2021. The let house gifted to daughter May 2020. Clients unaware that Capital Gain has been made and therefore taxable. Value at date of gift recorded at Land Registry  is a round sum estimate.

Client B

I phone up client to remind him tax on rental income due 31st January. He tells me property empty some months, sale agreeded. Neither Soliciter or Estate Agent has advised client of 30 day payment rule for Capital Gains Tax and the need to contact accountant.

 

 

 

 

Replies (13)

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By vinylnobbynobbs
22nd Feb 2021 16:21

I suspect not from recent experiences.

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By Paul Crowley
22nd Feb 2021 16:25

No surprises
They do not seem to be aware of SDLT on gifts to company where company and donor are related persons either

A shame there is no LegalWeb or EstateagentsWeb with any answers for them to fall back on

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By frankfx
22nd Feb 2021 16:39

Suggest client has a word with solicitor and agent.

You may want to read the engagement terms client signed up too.

Please...OP

Let us know if the engagement terms were fit for purpose.

Law Society or Conveyancer s society must have informed members that CGT disclosure and payment required.
Yes No?

By the way

If the lawyers have a website.

Check to see if any of their content refers to the new CGT reporting regime.

An interesting conversation could follow.

Please let us know the outcome.

May be a common failure at the onboarding stage when instructions accepted.

Barmy, in that advising client of obligations is a billing opportunity.

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By sarahg
22nd Feb 2021 16:42

I've had clients missed too - surely it is the solicitor who should be advising, we don't know until it's too late

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Scooby
By gainsborough
22nd Feb 2021 17:03

All the clients I've spoken to so far have not heard about the 30 day deadline from solicitors or estate agents at all.

The LOE I had personally from a solicitor had a standard paragraph saying it was the individual's responsibility to take tax advice on any transactions made - pretty much as expected.

Like Frank's idea of checking out the firm's website.

Thanks (1)
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By fawltybasil2575
22nd Feb 2021 17:42

@ CJaneH (OP).

You may find this thread useful:-

https://www.accountingweb.co.uk/any-answers/client-sold-second-home-no-3...

As I have advised in the thread, I strongly advise accountants to circularise all clients who own investment properties, to:-

(i) Forewarn them of the new CGT rules on residential properties, and indeed to

(ii) Obtain information, from the client, NOW re the acquisition, and subsequent enhancement expenditure, on such properties, and

(iii) Request their notifying their accountant immediately if, in the future, they are contemplating a sale of such property (to thereby alert them to the estimated CGT payable, and ensure that the 30-day return is submitted in time).

Whilst it is indeed disappointing that many Solicitors (and Estate Agents) do not alert their clients to the "30- day CGT", accountants could themselves be held accountable, by clients, for not alerting them to the new regulations.

Indeed, one could find solicitors advising their clients that they should take action against their accountant for not notifying them, on the grounds that it is the accountant (not the solicitor) who is engaged to attend to the client's taxation matters.

Basil.

Thanks (1)
RLI
By lionofludesch
22nd Feb 2021 18:17

Solicitors are pretty good at IHT and SDLT/LBTT/TTT but not very good on other taxes, I'm afraid.

I suspect they'll need to deal with some angry clients in the future if they don't point them in the direction of an accountant.

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Replying to lionofludesch:
Hallerud at Easter
By DJKL
22nd Feb 2021 20:18

No idea what they get taught these days but I actually took the Edinburgh University tax course in 1982-83 that was offered to law students as part of their LLB , this was before the days of the PG Diploma they now require to take post LLB (I took as an extra course not needed for my degree). This was a half course and it raced through the taxes and was pretty superficial, we only looked at IT,CGT and DLT and that was pretty much it. I suspect CTT got covered in their course on executry work.

As a general rule unless they hold both an LLB and are a CTA, and work within a field like say trusts etc, in my experience most solicitors are not very clued up on tax.

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Replying to lionofludesch:
Tornado
By Tornado
23rd Feb 2021 00:29

I am not sure what solicitors know about tax these days but my experience with two different solicitors dealing with two different Estates leads me to believe that they are unable to calculate IHT, and work on the basis that they provide information to HMRC and then HMRC do all the calculations.

In both cases it seems that neither of their firms have software that can do the complete job. I am a bit shocked (and annoyed) because our tax software can calculate very complex tax liabilities of all kinds when the correct information is entered into the software but when I ask for IHT calculations from my these lawyers, I have to wait until HMRC have issued theirs for the answer.

As far as claiming back higher rate SDLT on a second property that one of the deceased purchased as a main home before she died, one of the solicitors simply refused to do this for me (no explanation) and in the end I did it myself. All this coupled with part time working (Tuesdays and Thursdays only for one of them) it is difficult the see how they can possibly justify the eye-watering hourly rates they charge. You expect these people to know what they are doing but in fact they know relatively little.

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By AnnAccountant
23rd Feb 2021 12:28

Solicitors don't care and keep quiet - this was their attitude when the 30 day rule first came in for non-res and I doubt it's changed. Not very helpful to serving the client, but there you go.

Over recent years, as SDLT has moved further away from "stick a number in an online calculator" more and more are refusing to confirm SDLT treatments or engage with the rules to any real degree.

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Replying to AnnAccountant:
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By Southwestbeancounter
23rd Feb 2021 14:20

Agreed Ann.

We had a solicitor who computed the SDLT on a transaction but refused to follow it through and complete the necessary return as they said they didn't complete tax returns! They got their secretary to plug the figures into an online calculator and she used an out-of-date one so the figures were incorrect anyway!

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By Brend201
23rd Feb 2021 20:55

I know only one UK solicitor and she made no reference of any CGT filing obligation. In the specific cases, both apartments were sold at a loss but since the owners were outside the UK, a return needed to be filed regardless. Another person made us aware of the obligation, but unfortunately that was three days after the deadline and a fine of £100 was issued immediately.
To add insult to injury, the proceeds have still not been released (five months later) due to the inability of the Land Registry to confirm release of the charges. No penalties imposed on them though.

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By fogden
25th Feb 2021 11:22

We sold our main home and last October and the solicitors did make us aware of the 30-Day CGT. It wasn't relevant in our case so I assume that they are telling their clients as standard

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