Hmrc Offers Partial Amnesty To People Who Sell Their 2Nd Homes
News Posted On: 15 March 2013
Homeowners who have sold a buy-to-let property or second home and forgotten to declare the profits to the tax authorities are being offered a partial amnesty by HM Revenue and Customs.
While HMRC is actively targeting people who fall into this category, it’s also offering them ‘preferential terms’ with lower penalties if they come forward of their own accord within a limited period. If they do not come forward voluntarily, but wait for the taxman to track them down, they will incur far greater penalties.
This is the soft side of the Property Sales Campaign, targeting those who have sold a house which is not their main home and failed to inform HMRC of any profits they made as a result. It is aimed at catching people who have avoided paying capital gains tax, whether the sales took place abroad or in the UK. Sale of a property that someone has been renting or of a holiday home would fall into this category.
The deadline for declaring unpaid tax under ‘preferential terms’ is August 9th, and the deadline for paying the tax is September 6th. After September 6th, HMRC said it would take ‘a much closer look’ at the tax affairs of people who have sold properties other than their main home, but who do not appear to have paid any capital gains tax.
‘By using this campaign to come forward voluntarily, people will receive the best possible terms, as any penalty they pay will be lower than if HMRC comes to them first,’ said a spokesman for the tax authority.
Marian Wilson, head of HMRC Campaigns, said: ‘Some people will not understand that selling a second home, a holiday home or a property disposed of as a gift could attract capital gains tax.’ Ms Wilson advised those in doubt: ‘look at our website or contact us. Telling HMRC about your tax liabilities is simple and straightforward, and help, advice and support is available.’ Help is also available by calling HMRC on 0845 601 8819.
When people sell their main home, they don’t need to worry about capital gains tax: it almost never applies to these transactions. You only need to think of CGT when selling your main home if the property has not always been your only or main home, if it has been used for business purposes, you have let it out, or if you have sold part of the garden.
This is far from being HMRC’s first campaign. Previous campaigns have targeted offshore investments, medical professionals, plumbers, coaches and tutors, electricians and eBay traders. So far, they have cumulatively raised £547m in ‘voluntary’ disclosures and nearly £140m from follow-up activity, including 20,000 completed investigations.
So Ms. Wilson is no doubt serious about her warning: ‘After the opportunity [to disclose voluntarily] closes on 6 September, HMRC will use information it holds about property sales, in the UK and abroad, to identify people who have not paid what they owe. Penalties or even criminal prosecution could follow.’
The threat of criminal prosecution is certainly serious: HMRC is currently involved in 13 criminal prosecutions and has already secured five convictions.
Written by Les Calvert of Property Abroad Ltd
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