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Undeclared 2013/14 and 2014/15 income gains

Client's broker incorrectly included offshore income gains as capital gains - what now?

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Just discovered that my client's broker incorrectly included offshore income gains as part of the capital gains schedule in 2013/14 (£16K) and 2014/15 (£17K) so the amounts were not reported as income on her returns (which I prepared) when they should have been.  [The net gains (including the mis-reported gains) were below the annual exemption so no gains tax was due or paid.]  It's not clear if, or how, the broker advised my elderly client of the position but details have only just been passed on to me (when I queried the brought forward capital losses position).  The 2014/15 return is in time to correct and pay the tax due.  Am I right that the 2013/14 return is out of time to correct, given omission was not deliberate and reasonable care was taken?  What are chances of client avoiding penalty on the 2014/15 correction? This is going to be a large and unexpected tax bill for her.

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31st Jul 2018 17:58

Why you think you can correct the 14/15 return? Both returns are out of time to amend, unless you filed them within the last 12 months.

Write to HMRC under separate cover, explaining that this is an unprompted disclosure of an unintentional error for both years.

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to Tim Vane
31st Jul 2018 18:55

Sorry, when I said 'amend' I really meant I could write to HMRC and correct position. As far as 2013/14 is concerned, I was looking at the guidance and it seemed to say that there is no requirement to disclose if the action was neither careless nor deliberate (because more than 4 years ago)

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By Matrix
31st Jul 2018 22:38

Your client should go back to the broker and ask for their initial investment review - did she ask for income generating products? If she was always advised that the products gave rise to a gain then she may be able to claim against the broker. She should also seek recovery of your fees and interest in any case.

A new elderly client's financial adviser told her certain income was not taxable so she did not provide it to her previous accountant. I picked this up and resolved but she wouldn't go back to the adviser.

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