Calling Residential Property Owners – HMRC Clampdown
Have you sold a residential property, either in the UK or abroad, that’s not your main home? If so and you have made a profit, but have not told HM Revenue & Customs (HMRC), you might not have paid the right amount of tax.
HMRC have launched a tax amnesty (referred to as the Property Sales campaign) whereby you can voluntarily disclose your income or gains and pay what you owe by 6 September 2013.
However, after 6 September 2013, HMRC will use the information it holds to target those who should have made a disclosure under this campaign and failed to do so.
Who can use this campaign?
This campaign is for you if you’ve sold, or disposed of, second or additional residential properties either in the UK or abroad.
These could include a holiday home or a property that you rented out.
You may also be able to use this campaign where you have sold your main home. This would normally qualify for Private Residence Relief, but in some circumstances the relief is restricted. Where the entitlement to this relief is restricted, capital gains tax (CGT) may be due if you are liable to UK taxes.
If your circumstances meant that CGT was due on the sale of your main home you may be able to use this campaign.
Even if you didn’t originally purchase the property you may still be liable to pay tax on the gain, particularly if you acquired the property another way. For example, you may have inherited it or it may have been a gift.
If you wish to take part in this campaign and tell HMRC about any gain that you haven’t previously disclosed:
1. you can assess the correct level of penalty to reflect why you have not paid the right amount of tax in the past; and
2. if your circumstances warrant it you may be able to pay what you owe by installments.
If you are eligible to take part in the campaign you must also tell HMRC about any other income or gains that you haven’t previously disclosed.
This could include:
(a) income from property or land rental (less the expenses relating to that income);
(b) earned income not taxed before you receive it, for example, profits from another business;
(c) investment income not taxed before you receive it, for example, interest;
(d) taxed income where additional tax is payable; and/or
(e) capital gains on the sale of other assets or properties.
This is a chance to get things right now and know exactly how much it will cost to sort out your tax affairs for earlier years.
Notifying under the Property Sales campaign
If you decide you are eligible to take part in this campaign you must tell HMRC. You have until 9 August 2013 to do so, this is called ‘making a notification’.
At this stage you only have to tell HMRC that you will be making a disclosure. You will give details of the amounts involved when you make your disclosure.
Once HMRC has received your notification they will send you a letter with your unique Disclosure Reference Number (DRN) to use when you contact them.
The letter will also give you a Payment Reference Number to use when you make payment.
You will then have to calculate what tax is owed.
Newshams Tax Solicitors London have the expertise to help you navigate the property sales campaign and ensure that you can get the best deal available.
If you would like help with making your voluntary disclosure, calculating your liability and paying your tax, please contact us on 020 7470 8820 or e-mail us at email@example.com or visit our website www.newshams.com