Tracking down missing homes
The latest ‘anti-avoidance’ campaign is aimed at people who have undeclared capital gains from disposals of residential property, either in the UK or abroad.
Such a gain could have arisen on a holiday home, a property that has been rented out, or even a main home that has been sold without full private residence relief. Anyone who decides to take advantage of this campaign must inform HMRC of their intention to make a disclosure by 9 August 2013, and make the disclosure itself by 6 September 2013 – which is also the deadline for paying the outstanding tax.
The gains covered by the campaign are primarily those made between 6 April 2007 and 5 April 2012. More recent gains should be disclosed as normal under self-assessment. But earlier gains of up to 20 years old are disclosable if they were not declared deliberately.
However, there is a catch. HMRC must also be informed of any other undeclared income or gains, including any income from the property in question. There may be interest and penalties payable, and the campaign does not offer any special penalty mitigation.
After 6 September 2013, HMRC will use the information it holds on property sales to identify people who have not paid the correct amount of capital gains tax. The penalties will be higher than they would have been under voluntary disclosure.
Affluent Compliance Team widens aim
HMRC has been expanding its Affluent Compliance Team, the unit dedicated to ensuring that better-off people meet their tax obligations. The team started work in 2011, and has so far brought in an impressive amount of additional tax.
The original target group of taxpayers consisted of individuals who pay the top rate of income tax and have wealth of between £2.5 million and £20 million. The lower wealth limit has now been brought down to £1 million.
A sign of HMRC’s increasingly pro-active approach to tax avoidance is the pre-emptive strike against one particular avoidance scheme. Letters were sent to people who had signed up for the scheme, even though no legal challenge had yet been made against it, which is the normal approach. People who receive these letters have the choice of pulling out of the scheme or being treated by HMRC as a higher risk customer and having their tax affairs more closely monitored in the future.