From 6 April 2020 HMRC has amended the laws around Capital Gains Tax. This only applies to individuals and not companies!
From 6 April 2020 where you sell a property you are required to, within 30 days of completion, report and pay any Capital Gains Tax. This deadline is unbelievably tight and almost impossible unless you are incredibly organised well in advance!
There are late filing penalties and interest penalties on late payment.
HMRC has not advertised this change with any great enthusiasm. The law society has told HMRC they are not interested in knowing about this as they don’t deal with tax – and accordingly your solicitor won’t inform you of this when they act for you. This is not on their standard law society checklist forms which is a real pity.
This CGT reporting is done on a new standalone HMRC system that is not integrated into any other existing HMRC system. Where we have an authority to act on your behalf in place already – this is not recognized by HMRC on the new standalone system! We need to get authorities in place anew, wait for codes to arrive post and set up on a different HMRC portal. It could have been implemented a lot cleaner with better (with some!) integration into their existing system!
If you are thinking of selling (or know of other investors thinking of selling) a property that they own in their own name, you need to get your paperwork in order ahead of time. This mainly includes knowing, and being able to support, all purchase and capital costs incurred on the property. This is easier said than done! Where a property was purchased years ago, the capital costs have often become lost in time.
For self-assessment tax returns only the income and expenditure need to be reported. Any expenditure capitalised does not need to be reported (until it is sold) – and accordingly these costs are almost always not accurately and completely recorded. Almost every client (with an established portfolio) we have taken on from another accountant has had this information missing. We ask for it as routine but almost never get an answer to the standard we need should the property be sold.
There is a real cost of not having this information to hand!
As an aside, for all our self-assessment clients, we ask for and record these costs so that the information is available for when it is needed. This is not required for completing the compliance today – but this is just the level we have want to operate at. It pays to be well organised.
Please get a copy of your original purchase solicitors completion statement showing all purchase costs along with the full original mortgage document. Ensure you have any builders’ invoices for all extensions and conversions (not repairs!). Some costs initially incurred would also be capital in nature and a record of these will be needed along with supporting invoicing documentation.
Where you have found the missing paperwork and invoices and would like us to record it, this can be done for a very nominal cost and thus ensures it is no longer lost in time. Please do talk to us about this if it is of a concern to you.
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