Last week saw the end HMRCs amnesty launched in March 2013 targeting owners of second homes where Capital Gains Tax should have been paid.
HMRC said that by using the campaign to come forward voluntarily, people would receive the best possible terms. In particular with regards to penalties and the potential for prosecution otherwise.
Now that the amnesty period has ended, HMRC will increase its activity in identifying people who have failed to pay Capital Gains Tax by using the extensive levels of information and data it holds about property sales in the UK and abroad. Such information includes Stamp Duty Land Tax data, online sourced data, Land Registry and information obtained from third parties including mortgage lenders, rental and managing agents.
Last month, HMRC reportedly sent letters to 35,000 taxpayers who had not yet registered to pay Capital Gains Tax from the sale of a second home, holiday home or buy-to-let property. HMRCs investigations will go back up to 20 years. According to the 2011 census, almost 1.6m people have a second home in England and Wales, with 820,000 owning a second property abroad.
David Nash, Partner at Magma said: “Individuals and other entities with undisclosed income or gains from property should seek advice urgently to ensure that they are compliant with their UK tax filing and payment obligations. HMRC have significant amounts of information and data on property owners and consider the sector as one where significant tax evasion exists. Disclosure options exist for affected persons and taking urgent advice can result in significant savings.”