Can I report disposal just on the tax return

New client sold property 3 months ago did not report in 30 days

Didn't find your answer?

Hi All,

I have engaged with a new client recently and they have told me they had a rental property which was sold 3 months ago. I asked if they reported it using HMRC's new way of doing, explained the 30 days, etc. They said no and had no idea about the 30 day reporting and paying. Client is UK resident and property is in UK.

As I was preparing their tax return, they asked can it not just be reported on the return seeing as it would be prepared and filed quicker then using HMRC's new system and therefore not bother. I did not provide an answer as I wasn't sure, said I would look into it. 

My question is, if a client has not reported their capital gain on a property disposal using HMRC's reporting tool and they have gone passed the 30days but their tax return will be prepared and filed quicker then getting it all setup, can you bypass HMRC's reporting tool and just report on Tax Return? Suppose the same is if there is a disposal on the 31st March and tax return is prepared and filed on the 6th April, would you still need to go through the same process.

My thinking is no but I cannot find anything to say otherwise. Anybody experienced this before?

Replies (26)

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By Ianhodges
19th May 2021 10:19

My feeling is you should still do the 30 day return , albeit late . That generates an individual reference number to pay through and the correct due date . It should be possible to get the whole process done within a few days provided the client can handle his/her Government Gateway. I think if you just put it on the tax return , it will generate a due date of probably 31 Jan 2022 incorrectly , and you will still have the risk of ongoing penalties racking up all the time the 30 day return has not been done . Maybe appeal any penalty on grounds the client was unrepresented and unaware , no guarantees but HMRC might be sympathetic

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Replying to Ianhodges:
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By ShoulderShrug
19th May 2021 10:30

That was my initial thinking, report it so it is logged with HMRC.

Ianhodges wrote:

. Maybe appeal any penalty on grounds the client was unrepresented and unaware , no guarantees but HMRC might be sympathetic

Apparently they were told by old advisor that no CGT would be due as they have owned it so long, therefore don't report but put on SATR.
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Replying to ShoulderShrug:
By JCresswellTax
19th May 2021 10:32

ShoulderShrug wrote:

That was my initial thinking, report it so it is logged with HMRC.

Ianhodges wrote:

. Maybe appeal any penalty on grounds the client was unrepresented and unaware , no guarantees but HMRC might be sympathetic

Apparently they were told by old advisor that no CGT would be due as they have owned it so long, therefore don't report but put on SATR.

This is exactly what you have to find out before making a decision on 30 day return or not.

Gain in excess of AE - you will have to file (late) 30-day return.

No gain, or covered by AE - just include details on SAR.

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Replying to JCresswellTax:
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By ShoulderShrug
19th May 2021 10:38

There is a gain and CGT to pay on it.

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By jonharris999
19th May 2021 10:15

Your client's problem is more the paying than the reporting. It's the paying that's necessary within 30 days, as well. It isn't permissible to report a 31 March sale on an SATR before 30 April, expect to pay the tax the following 31 Jan, and hope that all is well.

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Replying to jonharris999:
By Paul D Utherone
19th May 2021 12:08

jonharris999 wrote:

Your client's problem is more the paying than the reporting. It's the paying that's necessary within 30 days, as well. It isn't permissible to report a 31 March sale on an SATR before 30 April, expect to pay the tax the following 31 Jan, and hope that all is well.


Well as discussed elsewhere it could be.

If contract for disposal was on 31 March with completion on 14 April, then the 30 day return & payment is due by 14 May, UNLESS you can submit the SATR before 14 May, in which case there's no need to do the 30 day return - FA 2019 Sch 2 para 4 https://www.legislation.gov.uk/ukpga/2019/1/schedule/2/paragraph/4 -, and the tax is payable on the following 31 Jan - FA 2019 Sch 2 para 6 https://www.legislation.gov.uk/ukpga/2019/1/schedule/2/paragraph/6

But unless disposal was right at the year end, and completion very delayed, we are past that option now.

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Replying to Paul D Utherone:
By Paul D Utherone
19th May 2021 20:40

oops, just noticed the title says 3 months ago, so though my point still remains true it is unlikely to be valid in this case

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By frankfx
19th May 2021 10:23

Surely the conveyancing solicitor would have advised your client to report?

If not that may be a modest mitigating factor when appealing.

Awebers:
Have you seen any standard wording in solicitor communications when they act in these cases?

At the very least the engagement terms may specifically refer to the tax obligations falling on the client.

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Replying to frankfx:
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By ShoulderShrug
19th May 2021 10:35

frankfx wrote:

Surely the conveyancing solicitor would have advised your client to report?

If not that may be a modest mitigating factor when appealing.

Awebers:

You would think someone would make them aware or flag it up at least. But this caught my eye today https://www.accountingweb.co.uk/tax/personal-tax/cgt-30-day-reports-catc... and it about sums it up.

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Replying to frankfx:
Tornado
By Tornado
19th May 2021 11:39

'Surely the conveyancing solicitor would have advised your client to report?'

In my recent experience, conveyancing solicitors probably do know about the 30 day rule but do not want to get involved with it. I can see that it would be very time consuming for them (as it is for us) and they probably think it would not be profitable for them to deal with, so they just ignore it as being a tax matter for Accountants.

Also based on recent experience as acting as an Executor, I am shocked that both of the Solicitors I engaged to assist me (on two separate Estates) simply did not know how to calculate an Inheritance Tax Liability properly and were very poor at communicating with HMRC, so in the end I did all that work myself. I am also a bit surprised at how primitive the HMRC Inheritance Tax service is with no online access to tax accounts and assessments that are extremely difficult to interpret.

In the future, I will only use Solicitors for the absolutely necessary legal work related to Probate and do everything else myself.

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Replying to Tornado:
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By frankfx
19th May 2021 15:42

I agree.

There does seem be an expectation gap.

Solicitor, as part of good service, draws attention to important matters for the client to seek advice elsewhere.

Just playing numb and dumb is disengenious as the client is not aware that their advisor is playing that game.

Duty of care?

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Replying to Tornado:
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By Open all hours
19th May 2021 17:36

From experience over the last 2 years, any solicitor faced with the prospect doing anything (apart from fobbing you off) within 30 days is likely to need medical attention. They’re not designed to cope with such timescales and the word urgent has been erased from their dictionaries.

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By Calculatorboy
19th May 2021 10:59

Dont think lawyers are culpable , in past no obligation for them to inform clients to report cgt , so why now ? albeit via a different reporting system ,

lawyers aren't giving cgt advice ( unless engaged to do that)

Besides I expect many do alert clients in engagement docs, and as we know clients never properly read things and expect a wet nurse

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By Carolynne
19th May 2021 12:06

I had a CGT technical query the other day and was passed onto an Inspector by the Technical advisor. Whist speaking to him, I also specifically asked about fines and penalties for a client who had not done the 30 day reporting, and he said to me HMRC have yet to fine anyone for not having put this in on time. He mentioned that there has been a covering under COVID to allow for delays which he felt had now passed but suggested there may still be no penalties for this, so hopefully if you put one in, there wont' be any repercussions apart from perhaps a little interest for late payment, but it has to go in.

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Replying to Carolynne:
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By Wanderer
19th May 2021 12:12

Carolynne wrote:

....... and he said to me HMRC have yet to fine anyone for not having put this in on time.

Your HMRC 'Techinical Adviser' is talking absolute rubbish!
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Replying to Carolynne:
By SteveHa
20th May 2021 12:57

Whilst I've only done a couple that were late, I preemptively appealed penalties, and in neither case were they charged.

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By rmillaree
19th May 2021 12:08

There was a really simple solution to this thorny issue which was for hmrc to agree with solicitors body that it would be mandatory for house sellers to sign a declaration that they are aware of the 30 days ref capital gains tax possibility and solicitor keeps copy on file - for all sellers using solicitor there would have been zero chance that anyone could have not then been aware of new obligations which to be fair if you werent expecting you probably wouldnt go looking for - obvioulsy people who sign and choose to ignore reality later are nicely banged to rights by facts proving they did know or have no excuse due to signing stuff and pretending whats there doesnt mean what it says . Obviously hmrc like stupid paperwork that serves no purpose but something simple and useful that does serve a purpose - no chance that will ever happen. Hey ho hmrc will no doubt say changes were well advertised - i suspect the answer on pointless would be pretty close to zero for bods who have seen one of those adverts! if they exist. Nice of the solicitors body to not take the bull by the horns and proactively help people not.

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Replying to rmillaree:
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By Hugo Fair
19th May 2021 13:10

Me (to anonymous HMRC rep): "How can it be the taxpayer's fault if no-one's told her/him and this is the first property they've sold in 10 or 20 or even 50+ years?"
H: "But their accountant will know won't they?"
M: "Probably, if taxpayer has one (not a high %age) ... and no use if accountant unaware until after sale of property."
H: "Fair point, but surely the conveyancing solicitor will tell seller?"
M: "Apparently not in most cases, as they see it as 'tax advice' for which they're not covered - and they've heard that you want to control registration of people giving tax advice."
H: "Oh. Well there's always estate agents - surely everyone uses them when selling property?"
M: "Not everyone, but most individuals do. Are you suggesting that HMRC should be registering estate agents to provide tax advice?"
H: (collapses in a fit of giggles, no further decipherable comment)
... end of conversation!

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Replying to Hugo Fair:
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By Tax Dragon
20th May 2021 07:37

I think I've identified why it's better to buy underwear at H&M and cast it off at Eminem...

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Replying to Tax Dragon:
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By Tax Dragon
20th May 2021 07:42

Oops. Another TD misread. I thought Hugo had introduced his post with "Me (to eponymous HMRC rap)".

(Is it my eyes or my brain that needs testing?! No, don't answer that.)

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Replying to Tax Dragon:
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By Hugo Fair
20th May 2021 10:48

Some of the best inventions start with a mistake ... and, although those who know my vast musical collection will laugh at the thought it contains any rap, I think I prefer your revision, which give my ramblings a veneer of rhythmic assonance.

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By Wanderer
19th May 2021 12:15

ShoulderShrug, it's not really worth wasting time on this. Client will get a £100 penalty + interest on the late paid tax.
It's easier to just get on & do it. You can have it all sown up in 2 or 3 days.

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Replying to Wanderer:
By Paul D Utherone
19th May 2021 15:07

What about the potential for daily penalties if the sale was a while back? Actually, maybe HMRC have accepted no dailies for these returns or am I thinking of something else? Worth double checking

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Replying to Paul D Utherone:
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By Wanderer
19th May 2021 16:22

Recent ones I've done, 3.5 months late, had just the £100 applied. No daily penalty.

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Replying to Paul D Utherone:
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By ShoulderShrug
19th May 2021 16:35

Paul D Utherone wrote:

What about the potential for daily penalties if the sale was a while back? Actually, maybe HMRC have accepted no dailies for these returns or am I thinking of something else? Worth double checking

No daily penalties, if you miss the deadline by up to 6 months, you will get a penalty of £100. More than 6 months, a further penalty of £300 or 5% of any tax due, whichever is greater. More than 12 months, a further penalty of £300 or 5% of any tax due, whichever is greater.

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Replying to Wanderer:
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By ShoulderShrug
19th May 2021 16:34

Wanderer wrote:

ShoulderShrug, it's not really worth wasting time on this. Client will get a £100 penalty + interest on the late paid tax.
It's easier to just get on & do it. You can have it all sown up in 2 or 3 days.


That's what I have done now, told them it needs to be done and also put on SATR.
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