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CGT - paid too much

We submitted the return within 30 days

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I am now preparing SA return for a client who had a CGT disposal during the year.

We prepared, and submitted, calculations within 30 days of sale.  Client paid tax at the time.

In our original calculations, we estimated 20/21 income to establish 18% / 28% rates.  Final figures show that client has overpaid CGT by approx £400.  I have entered the tax paid in box 12 of CG1, but the computations (PTP software) are not showing the overpayment.

Any suggestions ?

Thanks

Replies (12)

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By Paul Crowley
22nd Jun 2021 20:24

The original form needs to be amended.
But HMRC do not know how that can be done.
HMRC and IT. Chalk and cheese.

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By Tax Dragon
22nd Jun 2021 22:42

The original form cannot be amended. See this thread: https://www.accountingweb.co.uk/any-answers/residential-property-capital...

As for how you enter the tax, I'm sure I've seen that discussed in here already too.

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Replying to Tax Dragon:
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By Tax Dragon
22nd Jun 2021 22:52

Tax Dragon wrote:

As for how you enter the tax, I'm sure I've seen that discussed in here already too.

Maybe I'm thinking of your previous thread about this: https://www.accountingweb.co.uk/any-answers/sa-return-capital-gains-on-r...

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By K81
23rd Jun 2021 08:56

still waiting for final confirmation from HMRC how the overpayments will be dealt with.

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Replying to K81:
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By Tax Dragon
23rd Jun 2021 09:13

In what way?

I'm (genuinely) not seeing a difficulty here.

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Replying to Tax Dragon:
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By IslingtonAccountant
23rd Jun 2021 10:25

Basically the CGT system and the SA system don’t speak to each other (you’re shocked, I know).

The ATT are leading the discussions with HMRC on behalf of the professional bodies, the suggested workarounds at the moment are either:
- Amend the CGT return (as noted above this isn’t easy; or
- File the SA return, pay the tax for a second time, call HMRC to request a refund of the CGT paid.

It’s a right mess. Some more info here; https://www.att.org.uk/uk-property-reporting-service-users-guide

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Replying to IslingtonAccountant:
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By Tax Dragon
23rd Jun 2021 10:38

So do the new boxes on the SA108 not 'work'? If so, isn't the solution that HMRC makes them 'work'?

Richard (possibly even in the thread I linked to) did explain a flaw in the computations, maybe connected with this. But there's nothing here that, to me, doesn't look easily fixable. (It's just not in an agent's gift to fix it!)

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Replying to Tax Dragon:
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By IslingtonAccountant
23rd Jun 2021 11:17

I haven’t seen one in action yet, but my understanding is that the entry in that box is only credited against the liability on the property disposal, i.e. not against income or other gains.

So if your actual property liability is the same/higher than reported on the 30 day return all is good. The problem arises when your actual liability is lower than reported on the 30 day return.

I agree, it seems like it should be simple to fix. Showing the POA made re the 30 day return on the SA account would be my preferred solution.

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Replying to Tax Dragon:
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By Leywood
23rd Jun 2021 11:23

[quote=Tax Dragon]

''It's just not in an agent's gift to fix it!''

Its just most will try because we like to try to help clients.

The bonkers system makes agents look like they have no clue what they are doing, along with other bonkers things HMRC do, which some clients must think we make up.

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Replying to Leywood:
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By Tax Dragon
23rd Jun 2021 12:19

So OP's client has overpaid £400 CGT. She has a POA coming up on 31 July of £1,000. I'd advise her to pay £600.

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By ireallyshouldknowthisbut
23rd Jun 2021 11:20

Its an absolute mess

We had been doing these on the basis that we err on the side of 'extra tax' and are expecting to have rebates in almost all cases where the clients disposal is part 18% and part 28%.

So far I have just held off filing affected returns in the hope the penny will drop that these two things needs to be properly integrated via the tax return so we don't have the same face as with Class 2 NI. I imagine however HMRC will just invent a whole new department to deal with a workaround which will involve multiple calls and letters to get the tax back.

The lack of any sort of critical thinking and foresight here is appalling, but not unexpected.

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Replying to ireallyshouldknowthisbut:
By SteveHa
23rd Jun 2021 11:21

ireallyshouldknowthisbut wrote:

So far I have just held off filing affected returns in the hope the penny will drop that these two things needs to be properly integrated via the tax return so we don't have the same face as with Class 2 NI.

I suspect that you will be in for a long wait if you expect HMRC to have a robust, integrated IT system. They've been promising it for years but delivering diddly squat.

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