MANY taxpayers have been frightened by the online capital gains tax (CGT) returns on residences and the need to file the return “within 30 days”, according to chartered accountants Butler & Co.

The tight deadline presents problems of stress. These tax returns on the sales of residences mean that CGT must be reported to HMRC 30 days after the completion of the sale and tax paid thereon, which results in an acceleration of tax payments and the need to have the CGT calculations ready.

Many of the public think that the CGT returns only apply to those taxpayers with more than one residential property. However, a big area that is likely to be hit is property not qualifying in full for main residence relief, which could bring in many taxpayers who are not currently caught under the self-assessment system.

Examples include those residences with big gardens (outside the normal half hectare/reasonable enjoyment rules), horse paddocks included as part of the residence and garden, those individuals with a lack of evidenced quality occupation, property caught in divorce disputes, and more.

Recent tribunal decisions have shown HMRC’s enthusiasm to ‘hunt down’ main residence relief non-compliance. In practical terms, estate agents and solicitors seem to be taking a ‘not my problem’ approach, so responsibility appears to fall firmly with tax advisers and accountants. An example is there may be a small restriction to the CGT main residence relief. TCGA 1992, section 224 restricts the relief where part has been used exclusively for the purpose of a business. Other examples are executors selling residences above probate value for a gain that must be reported and the CGT paid. Many consider that the online CGT returns are not yet fully understood by taxpayers, estate agents and those in charge of conveyancing. Where clients are submitting the return tax advisers are seeing the advantages of collecting the necessary information when everything is fresh in the minds of those involved. Many would argue that the CGT returns should help to alert taxpayers to their disclosure responsibilities.

Anyone with queries about how to prepare these returns and/or meet their responsibilities then please contact Jennie Helm at jennie@butler-co.co.uk.