HMRC are looking into all residential property sales with a view to collecting tax on undeclared gains. Their investigations will start later this year.
HMRC announced in September that it will start reviewing tax records of all those who sold residential properties and is giving anyone who has not declared a taxable gain until August 5 to come forward. Those who come forward may receive lower penalties than those that could otherwise apply.
Their Property Sales Campaign (PRC) doesn’t apply to anyone who sells property as part of their business, through their company or as a trustee.
Sales on, or after April 6 2012 won’t come under scrutiny because the deadline for declaring these is January 31 2014, at the earliest.
HMRC has a record of every property transaction on which Stamp Duty Land Tax (SDLT) has been paid and as NI numbers have been reported on SDLT forms for some time now it should be relatively easy to tie these to the income tax records of individuals.
HMRC have not made it clear as to how far back it intends to look, but they have implied within their press release that sales from April 2007 onwards will be targeted.
Although HMRC’s campaign is concentrating on second properties, it will also look at the sales of homes which have been used for reasons other than residential accommodation.
It can be difficult to know whether or not there’s a taxable gain from selling a property partly used for your business, so we would therefore recommend you have your accounts looked over professionally, especially if you’re worried that you might have overlooked declaring a gain.