HMRC targets second home owners
HRMC have announced that second home owners are to be the latest group to be targeted for tax evasion. A new campaign known as the Property Sales Campaign has been launched. The campaign is aimed at those selling homes in the UK or abroad where Capital Gains Tax should have been paid on any profits made. There is usually an exemption from Capital Gains Tax on the sale of a property which has been used as the main family residence known as Private Residence Relief. However, the sale of a second home such as a holiday home or a property that was bought as an investment and rented out either in the UK or overseas may be subject to Capital Gains Tax.
Taxpayers with undeclared gains from property sales have until 9 August 2013 to notify HMRC. This can be done by email, mail or telephone. An actual disclosure together with an arrangement to make payment of all tax, interest and penalties due must be made by 6 September 2013.
The current round of HMRC’s targeted campaigns against tax avoidance goes back to the Offshore Disclosure Facility (ODF) in 2007, which targeted taxpayers with unpaid taxes linked to offshore accounts or assets. HMRC’s approach since then has revolved around offering specific targeted campaigns rather than general tax amnesties. These campaigns focus on target areas, which HMRC have decided pose the greatest risk of tax being evaded.
After the 6 September deadline, HMRC will begin approaching taxpayers who according to HMRC’s records should have made a disclosure but have failed to do so. Making a disclosure under the terms of the campaign can significantly reduce the amount of penalties due and should avoid the possibility of criminal investigations.