Undeclared capital gains - what happens/time limit?
Discussion
Can anyone offer any advice on the following? I don't have the full details, & what there is is 3rd hand, but briefly:
Parents sold a 2nd property in 2010'ish that they owned but was vacant, & apparently didn't do whatever was required to declare/pay CGT at the time.
They remember one parent mentioning a call from (presumably) HMRC enquiring about it, but they claimed ignorance/ deferred to the other partner who had health issues.
Nothing heard since.
Does anyone know if there are any time limits for expiry of these sorts of issues, or what the best way forward would be now? They clearly just put heads in sand over the issue & now not in good health. The above events have been recalled, with concern about what happens if they pass away in the next few years with this historic unpaid liability, & what that means - a claim on the estate?
Parents sold a 2nd property in 2010'ish that they owned but was vacant, & apparently didn't do whatever was required to declare/pay CGT at the time.
They remember one parent mentioning a call from (presumably) HMRC enquiring about it, but they claimed ignorance/ deferred to the other partner who had health issues.
Nothing heard since.
Does anyone know if there are any time limits for expiry of these sorts of issues, or what the best way forward would be now? They clearly just put heads in sand over the issue & now not in good health. The above events have been recalled, with concern about what happens if they pass away in the next few years with this historic unpaid liability, & what that means - a claim on the estate?
From what you've said about the phone calls and passing the buck, I'd call that tax evasion. In these circumstances HMRC can go back 20 years. Unlimited fines and prison.
The reality is it's been forgotten about by HMRC and nothing will come of it (99.9% likely).
If it is now reported, there'd be interest to date plus penalties. I'd need to check up on the penalty given the circumstances, but probably up to 30% if notifying without prompting.
The reality is it's been forgotten about by HMRC and nothing will come of it (99.9% likely).
If it is now reported, there'd be interest to date plus penalties. I'd need to check up on the penalty given the circumstances, but probably up to 30% if notifying without prompting.
There are two scenarios here, ignore it and in all likelihood nothing will happen but if so some reason it pops up on their radar, they'll go down their favoured slow burn route.
The slow burn route works by asking a question and you answering in good faith and 6 weeks later another letter and another answer and 18 months later you're still dealing with them. They have no concept of time nor space, they issue stupid notices often without reason and you need to respond. Anyone who has dealt with them at a lower level which is what you are at will tell you that the officers lack training, common sense and in a case I had, the ability to speak fluent English or write letter that made any sense.
I think they invented Treacle !
After spending an inordinate amount of money via our accountants, I found a retired HMRC inspector who for literally 5% for the fees I spent looked at matters, took the on and fronted them up. Less than 2 months after appointing him, it was done with minimal fines.
If they get a bee in their bonnet, they're a pain, if they think they have moral justification, they will annoy you into submission.
On the other hand if there is no liability, then no problem and do nothing but it seems as if you are not certain
The slow burn route works by asking a question and you answering in good faith and 6 weeks later another letter and another answer and 18 months later you're still dealing with them. They have no concept of time nor space, they issue stupid notices often without reason and you need to respond. Anyone who has dealt with them at a lower level which is what you are at will tell you that the officers lack training, common sense and in a case I had, the ability to speak fluent English or write letter that made any sense.
I think they invented Treacle !
After spending an inordinate amount of money via our accountants, I found a retired HMRC inspector who for literally 5% for the fees I spent looked at matters, took the on and fronted them up. Less than 2 months after appointing him, it was done with minimal fines.
If they get a bee in their bonnet, they're a pain, if they think they have moral justification, they will annoy you into submission.
On the other hand if there is no liability, then no problem and do nothing but it seems as if you are not certain
As has been said for failure to disclose they can go back 20 years so you can't breathe easily just yet. There will be interest and, most likely, a penalty of around 20%.
Who knows, they may be lucky and HMRC are often not especially joined up even internally so there is definitely a chance it will never be looked into. But, also as said, if they do find out then they most definitely will not just ignore it.
Who knows, they may be lucky and HMRC are often not especially joined up even internally so there is definitely a chance it will never be looked into. But, also as said, if they do find out then they most definitely will not just ignore it.
Imagine if HMRC start having a look at those that seem to have made fortunes from crypto (have they all declared the gains?) and influencers and only fans accounts (all income declared?) As was mentioned on another thread HMRC seem to be pretty good at getting the max out of legitimate tax declarers and payers but so so many seem to be evading them completely.
My advice in this situation? Speak to HMRC, be honest and expect to pay any tax due and a penalty. But then I wouldn't have evaded the tax in the first place.
My advice in this situation? Speak to HMRC, be honest and expect to pay any tax due and a penalty. But then I wouldn't have evaded the tax in the first place.
Enut said:
Imagine if HMRC start having a look at those that seem to have made fortunes from crypto (have they all declared the gains?) and influencers and only fans accounts (all income declared?) As was mentioned on another thread HMRC seem to be pretty good at getting the max out of legitimate tax declarers and payers but so so many seem to be evading them completely.
Off topic here. But the number of people who have actually made a taxable income, let alone a fortune, out of any of those activities is a lot smaller than they would have you believe. So even if HMRC have missed a few of them it's small beer in the grand scheme of things.steve_n said:
Bad reply.
HMRC don't like to forget things and waive tax...
You're right, wrong reply from me potentially. I know that HRMC don't like to forget but I remembered something about a 6 year limit.HMRC don't like to forget things and waive tax...
"HMRC will investigate in detail and retrospectively based on the case and how serious it is. If they suspect deliberate tax evasion, they can investigate as far as 20 years. Investigations into careless tax returns can go back 6 years and investigations into innocent errors can go backup up to 4 years."
https://taxqube.co.uk/how-far-back-can-hmrc-invest...
I can see it could well be 20 years, depending on the circumstances.
nickfrog said:
https://taxqube.co.uk/how-far-back-can-hmrc-invest...
I can see it could well be 20 years, depending on the circumstances.
As a vague rule of thumb:I can see it could well be 20 years, depending on the circumstances.
- Carelessly or incorrectly declared, go back 6 years, interest, small penalty
- Undeclared, go back 20 years, interest, larger penalty
- Deliberately hidden (shell companies, fraud), go back 20 years, interest, 100% penalty, possibility of jail time
The 6 year limit also requires that the liability was known to the "hypothetical Inspector", if they can't have known or couldn't be expected to know, then it does not apply.
Despite what people think, the Tribunals massively come down on the side of HMRC especially in contentious cases. That's a proven statistic.
Despite what people think, the Tribunals massively come down on the side of HMRC especially in contentious cases. That's a proven statistic.
DaveA8 said:
There are two scenarios here, ignore it and in all likelihood nothing will happen but if so some reason it pops up on their radar, they'll go down their favoured slow burn route.
The slow burn route works by asking a question and you answering in good faith and 6 weeks later another letter and another answer and 18 months later you're still dealing with them. They have no concept of time nor space, they issue stupid notices often without reason and you need to respond. Anyone who has dealt with them at a lower level which is what you are at will tell you that the officers lack training, common sense and in a case I had, the ability to speak fluent English or write letter that made any sense.
I think they invented Treacle !
After spending an inordinate amount of money via our accountants, I found a retired HMRC inspector who for literally 5% for the fees I spent looked at matters, took the on and fronted them up. Less than 2 months after appointing him, it was done with minimal fines.
If they get a bee in their bonnet, they're a pain, if they think they have moral justification, they will annoy you into submission.
On the other hand if there is no liability, then no problem and do nothing but it seems as if you are not certain
The tax partner at the firm we use is ex HMRC. I think a lot of them are. Our chap is not someone you would have wanted looking at your file as an inspector. He looks like Dracula, has a heart of ice and a superhuman memory.The slow burn route works by asking a question and you answering in good faith and 6 weeks later another letter and another answer and 18 months later you're still dealing with them. They have no concept of time nor space, they issue stupid notices often without reason and you need to respond. Anyone who has dealt with them at a lower level which is what you are at will tell you that the officers lack training, common sense and in a case I had, the ability to speak fluent English or write letter that made any sense.
I think they invented Treacle !
After spending an inordinate amount of money via our accountants, I found a retired HMRC inspector who for literally 5% for the fees I spent looked at matters, took the on and fronted them up. Less than 2 months after appointing him, it was done with minimal fines.
If they get a bee in their bonnet, they're a pain, if they think they have moral justification, they will annoy you into submission.
On the other hand if there is no liability, then no problem and do nothing but it seems as if you are not certain
The tax partner at the firm we use is ex HMRC. I think a lot of them are. Our chap is not someone you would have wanted looking at your file as an inspector. He looks like Dracula, has a heart of ice and a superhuman memory.
[/quote]
The guy I used was exactly like that, he had left as being a true tax person, he told me the pressure HMRC was under meant that the quality of staff varied massively and the local compliance units had either new inexperienced staff but well intentioned or long timers who shoved in there out of the way.
To be fair, like the Police they have a difficult job and the answer is to try to stay off their radar by keeping ones affairs in good order.
Clearly if that hasn't happened, then minimising damage is the key.
In my case HMRC actually accepted the guy's calculations with the minimum of back up documentation, far less than I had feared.
nickfrog said:
Do you know roughly how much net capital gain there was?
This is the question that needs answering.It's dead easy for HMRC to do their own back-of-an-envelope tax estimate because they know details of purchase & sale prices and dates from the Stamp Duty records and/or looking at the Land Registry. They can also get an idea of who was or wasn't living there from Council Tax records which is an easy way to identify a rental property subject to CGT. Rental income is also likely to have been reported by a taxpayer and may suddenly stop.
On a transaction of significant value it's difficult to argue that failure to report a taxable gain to HMRC is "innocent". A solicitor/conveyancer transferring a rental property or second home is more than likely to have mentioned potential CGT liability at some point.
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