ATT Technical Officer The Association of Taxation Technicians
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CGT property reporting still has problems

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HMRC has been working to tackle some of the problems with the UK property reporting service, but solving those issues is ‘challenging’ as Helen Thornley reports.

1st Oct 2021
ATT Technical Officer The Association of Taxation Technicians
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The rules require taxpayers to both file and pay their CGT within 30 days of completion, but those filing on paper need to receive a payment reference from HMRC before they can make a payment. Taxpayers who file online can pay immediately via the UK property service.

To ensure that paper filers are not disadvantaged by waiting of the reference number, HMRC ‘stops the clock’ on receipt of a paper form, so that their processing time doesn’t count towards the 30-day window. However, rather than start the clock ticking again after processing, paper filers instead get a fixed period of 14 days to pay from the date of the demand issued by HMRC.

This 14-day period has been creating practical problems for taxpayers. Post from HMRC can take seven to 10 days to reach the taxpayer, then a cheque must be posted back, so even if the taxpayer can react immediately when the demand lands; 14 days was not enough for many people. HMRC took these points on board, and now most paper filers will be able to pay within 30 days of their demand arriving.

Delays processing paper forms

There is still limited progress over when a paper filer can expect the demand to arrive in the first place, as agents continue to report processing delays with paper returns.

HMRC has acknowledged there are delays, but the ATT is continuing to press for more detail over the timescales involved. It’s hard for agents if they can’t say to a client when they can expect a response – and both agent and HMRC time is wasted following up progress.

I’d be really interested to hear what sort of processing times AccountingWEB readers are experiencing.

Interaction of self assessment and CGT reporting

As I discussed in July, the interaction between the CGT property reporting rules and self assessment  is extremely challenging because the CGT property service is a standalone system. This is a problem when the CGT paid in-year via the service is found later to be excessive and a refund is needed.

Where the amendment can only be done via self assessment (for example to offset losses on other disposals arising after completion), a somewhat clunky workaround involves calling HMRC to get funds transferred from one system to another, before any overpayment can be returned or offset against other self-assessment liabilities.

Where it is permitted to change valuation estimates or make an amendment via the property reporting service itself, provided this is done online and the CGT was originally paid by debit card, a refund should be automatically processed.

This put taxpayers who didn’t pay by card at a disadvantage. However, HMRC has recently suggested that it might be possible to upload the bank details in a separate document and that the system will prompt users to do this. Feedback from anyone who has succeeded in getting a refund this way would be welcome.

In the meantime, HMRC is still looking at what, if anything, it can do to improve the repayment mechanism for future years but the ATT understands that this is proving challenging.

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Replies (31)

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By Justin Bryant
01st Oct 2021 12:04

A paper filer would be lucky to get a response within 6 months. Some just seem to go into a proverbial black hole. They are probably mainly suitable for non-UK residents where there is a loss.

Thanks (1)
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By AdamMurphy
01st Oct 2021 12:29

It's almost as if this system was dreamt up by a disorganised organisation who don't get current systems working before moving onto the next pet project which keeps some civil servants in a job.

Oh...wait....

Thanks (5)
By ireallyshouldknowthisbut
01st Oct 2021 12:37

The system has completely failed.

They should junk it, start again having 'learnt' from the obvious issues that have arisen, and launch a new system when its ready.

To meet any sort of objective in revenue raising, a sensible system would start with the solicitor withholding a gain at a rate of 28% between the purchase and sales price by default so as to catch those looking to evade their taxes. If computations are supplied, the solicitor could reduce it to the actual tax due, or leave it to the tax payer to make a reclaim.

The current system does nothing other than introduce a very clumsy mechanism at considerable costs of time and stress to both the tax payer and HMRC to mildly accelerate CGT receipts which would have been paid anyway. We had a perfectly good system for this with the year end return. A simple POA against that would have been much simpler and easily understood by everyone.

Thanks (14)
Replying to ireallyshouldknowthisbut:
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By johnjenkins
04th Oct 2021 10:53

I actually don't understand how getting rid of the yearly return is moving forward in a digital age. HMRC won't get their money faster whatever they do. If money has to be paid quicker in one tax it will be slower in another. Sod's Law.

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By GHarr497688
01st Oct 2021 14:28

So how can MTD ever work when it's 200 times more complicated.

Thanks (5)
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By Hugo Fair
01st Oct 2021 15:29

As a combination of summary and understatement, Helen, this couldn't be bettered:
"If the amount of CGT originally calculated on the paper return exceeds the amount determined on self assessment, I suspect there will be a good deal of resistance from taxpayers to pay over amounts which then need to be clawed back either via self assessment or via an updated property return."

The overall impression of all these temporary fixes to an already floundering new 'system' reminds me of the face of someone who has tried shaving for the first time ... so is now covered in haphazard bits of 'sticky-backed plastic' trembling in the wind. Neither pretty, nor effective.

Thanks (3)
Chris M
By mr. mischief
02nd Oct 2021 17:22

The people at the top of HMRC really are the most clueless wallies you could wish to find, aren't they?

Thanks (3)
Scooby
By gainsborough
03rd Oct 2021 10:15

The last CGT paper return I submitted was in early January. The payment reference was received mid-May. Although a payment reference is generated, it still doesn't set up a property account apparently, so this taxpayer now has to submit another paper return the next time he sells residential property (he had issues with the Gateway account questions not matching answers).

It would also be sensible if the 30-days was changed to 60-days. Just had a case where it took the solicitor 12 days to issue the completion statement.

Withholding tax is one option but in the second case above a large part of the gain was covered by PPR, most of the remainder taxed at 18% and the balance was wholly needed to purchase the new property on the same day. 28% withholding would have made it impossible for the new property to be purchased.

Thanks (3)
Scooby
By gainsborough
03rd Oct 2021 10:15

The last CGT paper return I submitted was in early January. The payment reference was received mid-May. Although a payment reference is generated, it still doesn't set up a property account apparently, so this taxpayer now has to submit another paper return the next time he sells residential property (he had issues with the Gateway account questions not matching answers).

It would also be sensible if the 30-days was changed to 60-days. Just had a case where it took the solicitor 12 days to issue the completion statement.

Withholding tax is one option but in the second case above a large part of the gain was covered by PPR, most of the remainder taxed at 18% and the balance was wholly needed to purchase the new property on the same day. 28% withholding would have made it impossible for the new property to be purchased.

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By agknight
03rd Oct 2021 20:52

I have had half a dozen phone calls from people recently looking for help in filing their returns.

Firstly 30 day for a non financial person, when you have likely just moved house, is an unecessarily strssful deadline. Then the questions required to set up their own online account leave the majority flumoxed. Then finally the data entry is not clear on FHL and claiminmg ER.

Everyone I've known has ended up stressed and angry with HMRC. Their phone lines and help are appalling.

If this was a private enterprise it would be bust. Yet we have to smile and carry on with a complete farce.

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By janer
04th Oct 2021 11:14

The whole CGT reporting system isn't fit for purpose.
It's a complete nightmare to negotiate. I spent 3 hours on the phone with a client trying to set up a personal tax account (didn't think I needed one, I have an accountant to deal with everything!) and then a CGT account.
All because HMRC want their cut a bit earlier.
If it ain't broke, don't fix it!

Thanks (2)
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By rockallj
04th Oct 2021 12:06

“The introduction of this property reporting system has clearly not gone as smoothly as anyone would have wished” is an understatement.

The CGT reporting system is clunky, difficult to navigate. As agents we’re limited again in the help we can give.

The old mechanism should be scrapped, a new system integrating with SA introduced and a requirement for a solicitor to withhold funds, similar to stamp duty implemented.

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x
By rockallj
04th Oct 2021 12:06

“The introduction of this property reporting system has clearly not gone as smoothly as anyone would have wished” is an understatement.

The CGT reporting system is clunky, difficult to navigate. As agents we’re limited again in the help we can give.

The old mechanism should be scrapped, a new system integrating with SA introduced and a requirement for a solicitor to withhold funds, similar to stamp duty implemented.

Thanks (0)
Morph
By kevinringer
04th Oct 2021 13:02

HMRC launched the new regime 18 months ago, and yet these problems persist. That proves how inadequate HMRC's pilot was. I know that Helen and others brought many potential problems to HMRC's attention before the regime was mandated, but HMRC ignored them. Serves HMRC right for ignoring us. I hope HMRC heads roll for creating this fiasco.

Helen says "...more substantial guidance is in being written [by HMRC]...". Cart before the horse. Years ago HMRC would have written the guidance before the regime went live, not 18 months afterwards.

Regarding the paper forms, I've had about half a dozen so far. HMRC typically take 100 days to respond. But even though all the forms have been sent in by me, with a 64-8 in place, in a third of the cases HMRC did not respond to me.

Thanks (2)
Replying to kevinringer:
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By djtax
06th Oct 2021 11:08

'Years ago HMRC would have written the guidance before the regime went live, not 18 months afterwards.'

Kevin: rest assured I have pointedly made that comment direct to HMRC on two of the online meetings with HMRC on the problems with the CGT 30 day system (attended by me and Helen and reps from all the other PBs) . Plus at the same meetings I have politely suggested HMRC learn some lessons from this debacle (I think that was the polite word I did use!) on how (not) to introduce major new systems (thinking ahead to MTD for IT). My worry is whether the message gets to the ear of anyone senior at HMRC.

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Replying to djtax:
Morph
By kevinringer
06th Oct 2021 12:20

Thanks for representing our views. Our problem is getting the message across to HMRC's movers-and-shakers that we're not whinging accountants but this is a real problem for HMRC as much as taxpayers and it would save HMRC's resources if their regimes work better.

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Replying to kevinringer:
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By johnjenkins
06th Oct 2021 12:41

Now if HMRC had invested in "Agent strategy" instead of MTD, discussions would bhave sorted all these little niggles out. Unfortunately the push to get money in a lot quicker is overriding a sensible and flexible format.

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Replying to johnjenkins:
Morph
By kevinringer
06th Oct 2021 12:55

Excellent point John. We were promised the Agent Dashboard way back in 2012 and we're still waiting.

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Replying to kevinringer:
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By johnjenkins
06th Oct 2021 13:09

When "Agent strategy" was first announced I was slightly excited. Many of us went to the first meeting in London and I was suitably impressed and got more excited. Then, you guessed it, nothing happened. The reason given was fraud.

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Replying to johnjenkins:
Morph
By kevinringer
06th Oct 2021 13:19

I think "fraud" was an excuse, not a "reason". HMRC have never been able to substantiate how it could be used fraudulently. After all, HMRC's systems are secure and only accessible by registered agents. And what fraud could be committed by, for example, altering a PAYE coding notice? But hold on, what about CJRS? We have never submitted a single 64-8 covering CJRS but magically when HMRC needed agents help, suddenly we could submit CJRS claims for all our PAYE clients. And that was claiming real money. Now that could be fraud, but HMRC turned a blind eye to it because HMRC knew CJRS would fail if we agents weren't involved. And the CJRS systems were created from scratch in weeks whereas the Agent Dashboard was 9 years ago and still waiting.

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Replying to kevinringer:
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By johnjenkins
06th Oct 2021 13:24

I have a suspicious feeling that they pulled the plug on "agent strategy" cos agents thought it was a brilliant idea. Anything we think is good can't be good for HMRC.

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Morph
By kevinringer
04th Oct 2021 13:05

HMRC want to be the most digitally advanced tax authority in the world, yet if you complete HMRC's online CGT form, it doesn't appear on your online tax return: you have to key it in all over again. Given that HMRC launched the 30-day regime in the MTD era, how can HMRC be so short sighted?

Thanks (2)
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By Heating_installer
04th Oct 2021 13:50

I've just been trying to help my parents through this system. Fortunately my lurking round here meant I was aware of the new 30 day requirements (Thanks all!) and so having established that this required a new online account (why on earth is it not accessed through the existing personal tax account dashboarrd???) I sat down to help.
The biggest showstopping hurdle is the online identity verification system - while they have meticulous records of their affairs (SA etc) neither of my parents have a passport, and the questions relating to their credit history bear no resemblence to their financial affairs (mother took a rarely used Barclay card in the eighties and dad still has an Access card (defunct obviously:-) in his wallet which he used once back in the seventies - that gives you a flavour of their attitude to credit and loans) so despite obtaining their credit reports 9basically unpopulated) the facts as we know them don't match the answers the system is looking for. Nett result, online verification not possible.

I registered them both for online SA back in the days when verification was done by postal passwords, but they've continued to submit paper returns so the accounts have never been used.
Having spent tens of hours in phone queues the ever helpful staff at HMRC said they could be verified for CGT accounts via the existing SA accounts, this has been botched - Mum's personal (SA)tax account login now opens a CGT account (with no way to access her SA Account) and Dad's SA account login now returns the message that the login has 'expired' whatever that means!
They've paid up what they believe is due but with small hope of it being correctly allocated.
We're all at our wits end how to sort this mess out, the only option seems to be repeatedly hanging on the end of a phone for hours hoping that you finally reach one of the few competents at HMRC

Thanks (4)
Replying to Heating_installer:
Morph
By kevinringer
04th Oct 2021 14:27

@HeatingInstaller, I recommend you send HMRC a bill for the hassle and stress they have caused you. I personally would not persevere any more (you deserve a medal for getting this far) and I'd phone HMRC, say "capital gains tax" to the automated system and when you speak to a human ask for paper form PPDCGT for dad.

I guess this post is from someone who is not an accountant, so cases such as these are not being fed back to HMRC's movers and shakers. Helen, can you feed this experience back to HMRC. Despite the assistance and incredible patience of an IT-competent member of the family, dad is still unable to access his online 30-day CGT and neither mum or dad can access their SA. So despite many hours of trying, more is broken than when they started. Whoever devised this unworkable system needs to be sacked for the stress caused and the time wasted.

Thanks (6)
Replying to kevinringer:
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By Heating_installer
04th Oct 2021 23:57

Thanks for the form name, that might well save quite some bother!
Correct - not an accountant - just slightly more experienced than folks with the vagaries of HMRC after 35 years in small business - not that is helped this time!

Most big institutions seem to struggle with IT systems it seems but it does seem that HMRC are the authors of their own misfortune much of the time, I just can't fathom why this has been implemented as a standalone system - no digital data links here!

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Replying to Heating_installer:
Morph
By kevinringer
05th Oct 2021 09:15

All so true Heating Installer. HMRC really needs to talk to people like you: non-accountants who are doing their utmost to try and comply and engage with HMRC's IT but find they are constantly being prevented by HMRC's own IT.

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By Homeworker
05th Oct 2021 10:28

Husband and wife clients were due to complete on property sale and tried to set up PTAs but failed because passports were out of date. Wife spent an hour on the phone to HMRC trying, without success, to sort this out than gave up and rang me. I asked if they had been offered paper forms - no - so I ended up on the phone for 20 minutes before I could request them. Now we wait to see if they turn up!
Many pensioners have let property but will be unable to set up PTAs. I have already had to ask for paper returns for other clients and even filed one CGT report using my own PTA (but won't do that again thanks).
The system has not been well thought through.

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Replying to Homeworker:
Morph
By kevinringer
05th Oct 2021 10:39

Most of my 30-day CGT clients are elderly, and many elderly taxpayers are digitally excluded. With 30-dat CGT, HMRC has concocted the most IT-complex regime possible when the target customers are HMRC's most IT-challenged. This proves how HMRC completely failed their "Know Your Customer" exercise when dreaming up this regime. Homeworker mentioned the problems setting up PTAs, but this regime isn't even part of PTAs. HMRC couldn't have created a more complex, user-unfriendly regime if they tried.

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By Kathryn15
06th Oct 2021 15:48

I have just phoned HMRC to ask for a small CGT overpayment, arising from the final income figures in the 2021 Tax Return recently submitted being less than those estimated for the calculation of the CGT due and paid within 30 days of a property sale, to be offset against the income liability and was advised that this cannot be done. According to the guidance issued to HMRC staff the overpaid CGT can only be refunded to the taxpayer and they will need bank account details to do this. I argued that HMRC had issued guidance that the professional institutes had publicised advising that agents could phone and ask for the overpaid CGT to be manually offset against the IT liability. The person I spoke to at HMRC knew nothing about that. Very frustrating!

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Replying to Kathryn15:
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By johnjenkins
06th Oct 2021 16:10

It will get worse.

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By seonaid anderson
18th Oct 2021 12:29

Have just done my first update to CGT return to put in actual income details incl gift aid effect on tax rates .. one of the conditions of updating the return appears to be that you haven't submitted a self assessment return already?

So if offset against Self assessment is not working, as others suggest, it appears CGT has to be updated and refund claimed before self assessment return claiming the relief is even submitted.
Thankfully in this case the Self assessment submission was held up waiting for a UTR number....

Shambles...

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