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Challenging HMRC decision Section 16 TCGA 1992

I failed to disclose a loss in 2009-2010 tx year and HMRC refuses to allow me to offset the loss now

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In 2011 I sold a property in Bulgaria and made a capital loss of £33,000.  Being very naive of tax affairs I did not report the loss to HMRC.   In 2017 I sold my Buy to let property in the UK.  This prompted me to complete my first ever self assessment tax and submitted to HMRC.   As a consequence of this I also realised I would have to make a disclosure (under the let property campaign) for the buy to let rental business.  After a lot of research, HMRC have accepted that I made a loss on the UK Buy to let property each year and have agreed with my workings.   However, whilst researching the disclosure and building evidence I realised that I could have set the capital loss made with the sale of the bulgarian property against the capital gain in 2017.  However, due to ignorance I did not notify HMRC of the loss within 4 years from 2011.  HMRC have refused to carry forward the loss.  Are there any possible reasons how I might appeal this e.g. Under the terms of the let property campaign or by pleading ignorance?

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Psycho
By Wilson Philips
09th Oct 2019 23:41

Under the general rule that ignorance of the law is no excuse I suspect that the chances of a successful outcome are slim indeed.

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Replying to Wilson Philips:
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By The Dullard
10th Oct 2019 13:51

I think the tribunals have said that that proposition only applies in relation to criminal matters. It was one of HMRC's arguments in relation to at least one of the late NRCGT return penalty cases.

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Replying to The Dullard:
Psycho
By Wilson Philips
10th Oct 2019 14:13

You are absolutely right. I suppose there is an argument here that an unrepresented taxpayer would not know of the particular time limits for notifying a loss to HMRC. On the flipside, one might argue that any person realising a loss on disposal of an asset would probably want to explore the possibility of tax relief. It would be interesting to see how the Courts viewed this one.

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Replying to Wilson Philips:
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By Joe Alderson
10th Oct 2019 14:44

It would be interesting to see a case like this develop but there would be an onus on the taxpayer to show that they took sufficient measures to make sure that they were aware of what was required. That's where the NRCGT case was won, because the taxpayer took the initiative to contact HMRC and was then misadvised by HMRC (no surprises there). I'm not sure the same logic would apply here as did in the NRCGT case anyway, because there are no penalties arising for this, it's just a missed opportunity to carry a loss forward, but it would be interesting to see it challenged.

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Replying to Joe Alderson:
Psycho
By Wilson Philips
10th Oct 2019 15:16

I agree that the circumstances are a little different - with NRCGT there was an obligation on the taxpayer to do something under threat of penalty for failure (in the case I'm thinking of, there was - as I recall - no proactive contact with HMRC, the case was won simply because the individual, living Down Under, could not reasonably have been expected to be aware of what was particularly badly publicised legislation).

In this case, there is no obligation whatsover on the taxpayer - it's his choice whether or not to notify HMRC of the loss. Most prudent taxpayers would have made the effort to do so.

But who knows what the Courts would say?

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Hallerud at Easter
By DJKL
10th Oct 2019 01:46

Re the property CGT loss, are you really sure you have the loss amount you actually think you do?

The number of individuals who miscalculate these as they do not convert the correct figures into sterling at the correct dates using correct exchange rates is very high.

Whilst I suspect it is academic as unclaimable at leas,t if the lapsed loss is smaller than you currently believe, it may make you feel slightly better.

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By Joe Alderson
10th Oct 2019 09:31

Unfortunately the loss is gone, if you had declared within the time period allowed it would have rolled forward until offset against a future gain but there is no way to declare it this late.

I would always recommend that you seek professional advice when selling a high value asset like a second home/let property. There are a lot of things you could benefit from that you may not be aware of. Paying for professional help can save you a lot.

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By Montrose
10th Oct 2019 13:29

A very very long shot ! Any possible argument that the sale was conditional, and that the condition was only satisfied at a later date?. I assume you have in fact claimed the loss, so further time is not running against you.

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By The Dullard
10th Oct 2019 13:48

So to summarise, engaging an accountant might have saved you a few grand?

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By Accountant A
10th Oct 2019 14:37

Chris Canning wrote:

 In 2017 I sold my Buy to let property in the UK.  This prompted me to complete my first ever self assessment tax and submitted to HMRC.   As a consequence of this I also realised I would have to make a disclosure (under the let property campaign) for the buy to let rental business. 

Have I got this right? You are (presumably) as a teacher, someone of some degree of intelligence but it never occured to you that owning a buy-to-let property brought with it tax obligations? I'm staggered.

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Replying to Accountant A:
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By Tax Dragon
10th Oct 2019 15:03

I did wonder whether a wombling great uncle had stumbled across this thread (those wombles are always nosing around)
https://www.accountingweb.co.uk/any-answers/delightful-swearing-at-staff...
and thought "hey, DJKL doesn't include my profession, teaching, in his comments about higher standards", subsequently joining the gang to make his Bulgarian point.

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Replying to Tax Dragon:
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By Accountant A
10th Oct 2019 15:20

Tax Dragon wrote:

I did wonder whether a wombling great uncle had stumbled across this thread (those wombles are always nosing around)
https://www.accountingweb.co.uk/any-answers/delightful-swearing-at-staff...
and thought "hey, DJKL doesn't include my profession, teaching, in his comments about higher standards", subsequently joining the gang to make his Bulgarian point.

I'd believe anything seeing what sort of stuff this site produces these days. Good for my self esteem though. A few minutes reading on here and I feel like Einstein compared to some of the posters.

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Replying to Accountant A:
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By Tax Dragon
10th Oct 2019 16:36

Further weight for my GUB theory comes from the observation that the block in s16, to which the OP refers, was introduced by FA2019.

There's no way HMRC is that up to date, and no way the OP is simultaneously aware of the changes to s16 and in a position to claim ignorance of the law.

Someone, somewhere, is having a giraffe. And I'll eat your hat (I don't have a nice one) if that someone is called Chris Canning and is to be found at St Marys RC Primary School, London.

(Of course, since s16 had not been amended in 2011, we'd be looking at old rules in relation to such a loss. IIRC, they're the same, but based on different authority which I can't be bothered to look up - but which, unlike NRCGT, is well old.)

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Replying to Tax Dragon:
Psycho
By Wilson Philips
10th Oct 2019 16:41

Tax Dragon wrote:

Further weight for my GUB theory comes from the observation that the block in s16, to which the OP refers, was introduced by FA2019.


Eh? Section 16(2A) was inserted by FA 1995
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Replying to Wilson Philips:
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By Tax Dragon
10th Oct 2019 17:14

Oh yes. (My heavy eyes had slipped to the line below... though they're not as red as my face now!)

Sorry, Unc.

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Replying to Tax Dragon:
Hallerud at Easter
By DJKL
10th Oct 2019 17:02

Whilst I did not directly myself take a pop at teachers (I would not dare given where my other half works) I did invoke my father further down the thread to allow him his posthumous rant regarding teachers and their being professional. Mind you, he would have also said the rot started with "professionals" going about their vocations without wearing ties or with unpolished shoes or even worse brown shoes with a navy suit (shudder!!)

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Replying to DJKL:
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By Tax Dragon
10th Oct 2019 17:29

Oh yes.

My angle was more:
Lawyers - truth (not lies)
Accountants - probity (not corruption)
Clergy - virtue (not licentiousness)
Teachers - knowledge (not ignorance)

But thinking about it, it was a dead-end thought, expressed badly and in the wrong place. Sift, feel free to delete me from this thread.

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By Adam12345
12th Oct 2019 08:45

It depends on whether HMRC have opened an enquiry or discovery. If the latter, you may be able to rely on TMA 1970 s.36(3).

That said, if it relates to 2017/18 then HMRC are probably in time with their enquiry

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