How to simplify CGT processesby
The OTS recommends 14 changes to CGT calculations and reporting to make life easier for taxpayers and tax agents, but above all, more HMRC guidance is required, as Helen Thornley explains.
I sat on the OTS consultative committee for both of the OTS reports into CGT, a personal capacity, so I’ve seen this process from the inside.
Second CGT review
The OTS’s first CGT report Simplifying by Design looked at the structure of the tax, and included some controversial ideas around removing the tax-free uplift on death in certain circumstances.
This second CGT report considers some of the practical and administrative issues that advisers and taxpayers must wrestle with on a regular basis. Many of the 14 recommendations are intended to both help to bring CGT up to date and to try to level the playing field for those without the benefit of professional advice. The OTS also calls for improved guidance from HMRC in a number of specific areas.
UK Property Reporting Service
In my role as an ATT Technical Officer, I have received a lot of negative feedback about the UK Property Reporting Service – or ’30-day reporting’ – which launched in April 2020. I know therefore, that many will be disappointed that the OTS haven’t recommended scrapping it.
Alas, such a recommendation was never going to be politically possible. Government accounts are on a cash flow basis so, even though the policy doesn’t change the tax due, removing the measure would count as a ‘cost’ to the Government as receipts already budgeted for would have to be deferred.
Accordingly, OTS have focused on two measures that might help - as Paul Aplin has already discussed. These are:
- extending the deadline from 30 to 60 days, and
- requiring conveyancers to help improve awareness by requiring them to provide information about the measure to vendors.
The report also notes the process of agent authorisation for the UK property reporting is complex, access for executors is inadequate or non-existent and what guidance does exist is extremely limited. I couldn’t agree more.
The ATT resorted to writing its own guide to using the service and we are continuing to call for HMRC guidance on key areas including dealing with losses, making amendments and the interaction with self-assessment. This is essential not only for agents but also for the public at large, as the OTS report highlights an estimated 40% of 30-day returns have been submitted by an agent, leaving 60% to be submitted by the taxpayer.
Single customer account
As one of their longer term recommendations, the OTS propose that HMRC should pull together all three routes for reporting capital gains – self-assessment, ‘real time’ CGT reporting and the UK Property return – into one place, to which agents can be granted access. This fits nicely with HMRC’s longer term digital strategy of a Single Customer Account but is likely to bring additional development costs.
A major problem with the UK Property Reporting Service is that it sits outside both the Personal Tax Account for taxpayers and the 64-8 route for agent authorisation. This is confusing for taxpayers and agents alike, and inclusion in a single digital account to which agents can be granted access would definitely be very welcome.
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Helen Thornley has a focus on personal and capital taxes. Initially training as an accountant before moving to tax, she worked in practice until her appointment as a technical officer in 2017. She also has an interest in the history of tax.