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Capital gains tax reporting proves troublesome for taxpayers and advisers
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CGT 30-day reports catch out unwary clients

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Reporting capital gains on property disposals within 30 days is causing problems for taxpayers, particularly when estate agents and solicitors fail to alert them to the new requirement.

18th May 2021
Editor in Chief AccountingWEB
Columnist
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Poor publicity and inept CGT reporting systems are building up a significant administrative and financial burden on taxpayers and continuing difficulties for their advisers. The problems extend to conveyancing solicitors, who are not alerting their clients to the new 30-day reporting regime for residential properties, according to Whitley Stimpson director Owen Kyffin.

“We’re coming across clients where there simply isn’t an awareness of 30-day filing,” Kyffin told AccountingWEB.

“Since last April I’ve done around 15 reports, of which three have been late because they were not aware they needed to file one. It’s just such a fundamental sea change, because previously it would have gone on the self assessment return in the normal way.”

Whitley Stimpson wrote to its clients in early April and followed up with a warning to local conveyancing solicitors, who appeared to be unaware of the new reporting requirements too.

Lawyers unaware

The firm reminded laywers handling property sales to consider whether the 30-day reporting requirements will apply.

Conveyancing solicitors typically look after the admin and payment of stamp duty on property transactions, and that should be covered in the letters of engagement they give to their clients. But how many of them are aware of the CGT reporting changes introduced last April and have taken responsibility for ensuring their clients comply?

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Replies (18)

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By carnmores
18th May 2021 14:23

'solicitors fail to alert' never seen that has anyone else . negligence surely?

..right next to Yield 20% on Bitcoin, how marvellous is that?

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By CJaneH
18th May 2021 16:45

Currently I believe Solicitors are involved in advising if people on choices between being Joint Tenants or Tenants in Common (consequences for income tax), gifts of property (Capital gains tax consequences), arrange searchs' on purchase of property, set up trusts for peoples homes to benefit the children, draw up wills and advise on inheritance tax but those who provide conveyancing services seem unable to advise that Capital Gains may/will be due and that their client needs to notify their accountant/or appoint one promptly when a residential property that does not qualify as a PPR is about to be sold.

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By jon_griffey
18th May 2021 18:04

It is such a pig filing these returns online. HMRC seem to make the process as difficult as they can. I have done a number of these returns. It is the same story - it is usually a one-off client, more often than not they are elderly and can't get to grips with registering an account online. It is easy to spend an hour on the phone with the client, walking them through the screens and they are faced with a load of questions like when did they last renew their mobile phone contract, open a bank account etc, which they are not sure of and so fail the validation. If they don't have a passport then they have no hope.

I think HMRC must realise how difficult it is. The other day a client gave up on the online form and called HMRC and with no hesitation was emailed over a paper form.

If HMRC want to increase compliance then they need to make this process much easier. Why can the return not be done with a structured email?

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Replying to jon_griffey:
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By Cazzie B
19th May 2021 12:09

We have filed about 8 online and got payment reference straight away.

We have filed 14 paper forms since January and had no response from HMRC
So no reference to make payment.
Paper forms were on time, so no penalties and if HMRC add any interest, they will be removing it !!!

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By SteveHa
19th May 2021 09:06

The whole process is a clustercoitus, needing client's to step out of their comfort zones not once, but twice before we can assist them. I have one that has to filed by Friday, in respect of an elderly (70+) couple, who have no technical know how at all.

Whoever thought it up wants shooting.

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By Hugo Fair
19th May 2021 10:52

Me (to anonymous HMRC rep): "How can it be the taxpayer's fault if no-one's told her/him and this is the first property they've sold in 10 or 20 or even 50+ years?"
H: "But their accountant will know won't they?"
M: "Probably, if taxpayer has one (not a high %age) ... and no use if accountant unaware until after sale of property."
H: "Fair point, but surely the conveyancing solicitor will tell seller?"
M: "Apparently not in most cases, as they see it as 'tax advice' for which they're not covered - and they've heard that you want to control registration of people giving tax advice."
H: "Oh. Well there's always estate agents - surely everyone uses them when selling property?"
M: "Not everyone, but most individuals do. Are you suggesting that HMRC should be registering estate agents to provide tax advice?"
H: (collapses in a fit of giggles, no further decipherable comment)
... end of conversation!

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By trecar
19th May 2021 10:52

I see from the article that HMRC are continuing their policy of making tax as opaque as possible whilst doing all they can to hinder compliance. What happened to the canons of taxation that I was taught were the mark of a good and efficient tax administration. A 30 day reporting policy is designed to catch people and trigger fines. Contrary to what spokes people say tax policy is increasingly designed to use penalties as an additional fund raising vehicle for the government. Why are our MPs complicit to such attitudes?

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Morph
By kevinringer
19th May 2021 13:19

The whole 30-day regime is a disaster.
Firstly the process of taxpayers authorising agents: not one of my clients has done is successfully so in every case I've had to phone HMRC (45+ minutes in the queue) and obtain a paper PPDCGT. This is crazy because, like most agents, I've been 100% digital Tax Returns for decades and I can submit a digital SA Tax Return without having a 64-8 in place. And a 64-8 covers SA which includes CGT. So why did HMRC make this tiny part of CGT subject to a different authorisation?
Secondly, in normal times we could ask clients into the office and go through the authorisation process with them. But we were in lockdown when 30-day CGT started. Why start a major reporting regime change just days into the UK's first national lockdown?
Thirdly, the CGT has to be estimated because the income has to be estimated. Most of my clients are self-employed and can't predict their income at the best of times, and certainly not during Covid.
Fourthly, HMRC have told me they are currently about 130 days behind processing the PPDCGT. I've got clients I'm ready to submit their 2021 Tax Return but can't because I'm waiting for HMRC to process the PPDCGT.
Altogether this just adds up to a whole lot more time. One client made a very straight forward gain: I already had the date and cost of purchase and the client gave me details of disposal. No PPR. Very simple computation. It would only take minutes to input into our regular Tax Return software so I might not even have charged her for it and just regard it as part of the Tax Return service. But she's digitally-excluded and I've got to allow best part of 2 hours to order the PPDCGT, fill it in, get it signed, post to HMRC with computations, wait 3 months for processing and so on. If there's one thing HMRC are good at, it's the creation of resource hungry regimes. Red tape is alive and well with HMRC.

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Replying to kevinringer:
By SteveHa
19th May 2021 15:10

Don't forget those that know beyond doubt that they will have losses available to set against the gain later in the year, but are unable to bring those losses into account and so be stung for a charge that won't ultimately be due.

Mine is one such case, elderly farmers, and there is no doubt that 21/22 will report substantial losses.

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Replying to SteveHa:
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By carnmores
20th May 2021 13:13

In over 22 years on Aweb this is the best answer / critique that I have ever seen. Thank you Kevin

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By Ian McTernan CTA
19th May 2021 13:51

It's a terrible system. It once again shows how awful HMRC are at designing these things.

This should all happen as part of the selling process. When a solicitor is appointed, they obtain agent details from the client. Agent and solicitor liaise and all purchase details are logged into the solicitor's system. Solicitors are already doing the SDLT Returns so surely these could be adapted as they contain the client's NI number and hence HMRC should be able to link this to the client's tax account.

Agent and solicitor confirm the tax details and on completion solicitor provides completion statement and agent confirms the amount of tax payable which the solicitor then pays to HMRC from the proceeds. HMRC system issues receipt. Amount can be estimated as final calculations will be included in the client's Tax return in due course.

Instead we have this crazy system of having to create a tax account, then a CGT account, obtain the reference, get a code, get authorised and then fill in a long list of questions in order for HMRC to tell you what they think is due and then pay it, all within 30 days when most people don't even know the system exists.

Pretty sure it's all just a penalty raising exercise by HMRC.

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By North East Accountant
19th May 2021 17:10

Ignore the online system.

Get a copy of the paper return. Copy it. Tippex out name, references and barcode. Recopy.

Now just the new copy as your master and copy for every return you send in.

Post it recorded delivery and you have a receipt proving it was delivered on time.

Not exactly high tech but works a treat and saves the nightmare trying to get clients to set up the online accounts.

HMRC should hang their heads in shame......their new system is a total and utter joke.

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Replying to North East Accountant:
By jon_griffey
19th May 2021 17:46

Courtesy of my client, I am in possession of a blank PDF form from HMRC.

The key question is, is it permissible to forget about the online service and just use the paper form as a matter of course?

The covering letter from HMRC included no references, other than the UTR and NINO which suggests that no client specific record has been set up and we can use the blank form for any clients.

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By dmmarler
19th May 2021 17:48

Beware the new client who comes for CGT advice on property sale, has sold present house and says it is Private Residence. When they originally bought it they let it out while they were living with a partner/working abroad, etc., and when things moved on they came back and took up residence in the house. HMRC does not keep records so may not be able to check that the property income declared xx years ago related to the same property (if it was declared). However, an accountant who does not have a record of having checked all this may have some explaining to do. As you all say, this is a complete mess.

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By denise shulman
19th May 2021 19:01

System is very inflexible.
What do you do when the interest in the property was obtained in more than one stage, there is no option for this, just an acquisition date and original cost or market value?
also when there has been a transfer just prior to sale between spouses what date do you put in for the acquisition date especially if the PPR is due?

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Replying to denise shulman:
Morph
By kevinringer
20th May 2021 11:50

I've had cases, but they've all been paper form PPDCGT so I've written an explanatory note on the form.

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By jillpalmer
19th May 2021 22:56

It gets worse - any overpayment of the CGT does not get offset against the 2020/21 tax liability calculated when completing the tax return. Apparently, to get the refund an amendment to the 30 day CGT form is required. Unbelievable!
Unfortunately, I have one such case at the moment.

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Replying to jillpalmer:
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By North East Accountant
20th May 2021 08:46

This has got to be a wind up........but it doesn't surprise me from HMRC.

I hope the idiots who thought up the 30 day CGT system are no where near MTD......imagine what lunacy they'll come up with for that.

For example.... imagine the four quarterly submissions don't tie in with the End of Period Submission and any amendments to a transaction in each quarter have to be dealt with by filing an amendment for that quarter......... hang on I seem to recall that that was the HMRC position in 2016.

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