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Sold an Inherited or Second Property? You NEED to file a CGT return within 60 days to HMRC

Capital Gains Tax property disposal return needs to be filed within 60 days of completion of sale of your second property (CGT). If you have sold a second property that is not your main residence (this includes an inherited or gifted property) you must file a CGT UK property return within 60 days of comptetion (unless the property has made a loss).

In April 2020, the UK government introduced the requirement for UK residents to report and pay capital gains tax (CGT) on disposals of UK residential property – the deadline for filing this information is 60 days from the date of completion.

This information must be submitted on a CGT Property disposal as opposed to your self assessment (SA) return – the exception to this rule is where the SA return is filed within 60 days of completion of the property transaction (ie, before the deadline for the CGT return). In that situation, it is not necessary to file a CGT return.

If the disposal has been reported on a 2020/21 SA return, but no CGT return was filed, it is not now possible to file the CGT return. Our Institute, the ICAEW has asked HMRC how taxpayers should correct that default and what position it will be taking with regard to penalties for not having filed a CGT return. It seems that it will be some time before this question will be answered.

HMRC finally published its guidance on reporting capital gains on UK property in December 2021 and continues to update the manual.

Self assessment payment offsets

For 2020/21, where the CGT liability per the SA return is lower than the CGT reported and paid on the CGT return, it is usually necessary to phone HMRC to request a manual offset.

This issue has been mostly fixed for 2021/22 returns. Any CGT overpaid is offset against income tax due. However, the fix does not cover the situation where the SA return shows an overall refund. In that situation, it is still necessary to phone HMRC to request a refund of the CGT paid.

Other issues

Other issues being discussed by the professional bodies and HMRC include:

  • Difficulties obtaining a paper CGT return and the significant number of cases where a paper return is needed. This includes cases where the taxpayer is unable to set up a government gateway account because of the limited identity verification options available. It also includes non-resident taxpayers who have no requirement to obtain a unique taxpayer reference (UTR), but who are required to report transactions with no tax liability. It is understandable that HMRC wants to encourage online filing. Most agents and taxpayers prefer that option, but it needs to be acknowledged that many can only file paper returns and it needs to be easier to obtain a form.
  • Delays to the processing of paper CGT returns. As of 23 May 2022, HMRC was processing the CGT returns received on 19 April 2022, so it is reasonably up to date. Payment cannot be made until the return has been processed and the payment reference has been issued. HMRC allows 30 days from the date the assessment is issued before charging late payment penalties (assuming this is later than the normal 60-day deadline).
  • The lack of an option to appoint an agent for CGT returns only. An agent can be appointed using a 64-8, but that does not give access to the online service and would displace any existing agent appointment.
  • The need for greater awareness. HMRC is exploring how it might use land registry data to alert taxpayers to the requirement to report CGT within 60 days of completion.

HB Accountants would like to thank the ICAEW for the information provided in the blog above.

HB Accountants are here to help: giving you access to experienced accountants and useful information and support no matter your business size or sector. If you would like a no obligation discussion about how we can help you and your business, please feel free to contact the team on 01992 444466. 

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The information contained above is for general guidance purposes only. Whilst every effort has been made to ensure the contents are accurate, please note that each individual has different circumstances and it is essential that you seek appropriate professional advice before you act on any of the information contained herein. HB Accountants can accept no liability for any errors or omission or for any person acting on or refraining from acting on the information provided in the above

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