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Property Sales and the Taxman!

We all know the Government are short of money and they are looking at many different ways to try and raise additional revenue to boost their coffers.

Now, I do have some good simple ideas of my own as to how they can raise additional funds (I am sure you will have your own ideas to add as well!). MP’s (Members of Parliament) could be liable to a higher rate of Tax every time they do not specifically answer the question put to them by the interviewer (that in itself would raise a small fortune), or an even radical suggestion could be to impose all regular viewers of the T.V Programme EastEnders with an additional Tax rate of 5% Tax, (do I hear a round of applause breaking out?), But in the interest of fair play here, these same viewers could claim a 1% rebate against this new Tax, for every episode of Inspector Morse or Lewis they can prove they have watched. So, every regular EastEnders viewer could legally minimise this new Tax cost!

No, I don’t think the Government will bring in any of these types of Taxes to raise revenue. No, what they tend to do is to sit down with HMRC and then ask HMRC for their ideas as to how to get more out of Businesses and the general public. So, it is with great interest we now hear of the latest HMRC initiative, or campaign as they are calling it, into Property Sales.

This campaign is due to start in March, and basically HMRC will be on the alert looking out for the sale of any residential property, that is not being used as your own private residence. This is because if a property is sold that has never been used as your PPR (principal private residence), then there can be CGT (Capital Gains Tax issues). Even, if the property has been used as the family home at some point in the past, then there still could be some CGT issues. The rules of PPR and the effects of CGT can become quite complicated, so it is always best to let us know at JCL (Jones Cooper Limited), when you acquire a second property, and we can then help and advise how you should structure things. In some cases, there can be opportunities to avoid CGT by various Tax elections and reliefs, as the MP’s (back to these people again), have legitimately used in the past to their full advantage on the issue of ‘flipping’ on second homes. In the vast majority of these cases, all the MP’s (or at least their Accountants) have done is to take advantage of a Tax loophole here, and arranged their affairs in the most Tax efficient manner. Nothing wrong with this of course.

So, when HMRC start this campaign in March, how/who are they going to target?  - Well, they could put an advert in the local paper “£5,000 Cash Reward for Information relating to Sale of Properties”, or they might send undercover agents around the local Pubs and Bars to listen in on the local ‘Pub-Talk’ and try and catch people that way. I think though in my local, the undercover agent would stick out like a sore thumb, as I am sure some of the characters in my local worked as extras in the alien bar scene in the film ‘Star Wars’. If you have ever seen the film, you will know what I mean, if you haven’t, then sorry, you won’t have a clue what I am talking about.

No, what I believe HMRC will do is to do a bit of cross-checking of records. They could look at the Land Registry records detailing all the properties sold and sold by whom in say a particular month, and then cross-check this name and address to the private address of the individual. Or they may decide to examine the local Government Rating Lists or Electoral register and compare this to the Land Registry. I am sure they will have on board an IT techie person who can produce some computer software that will quickly produce this information in a matter of minutes. Obviously, once they have this, they can then identify their target. To complete this purported espionage angle, all we would need is the leading HMRC official in charge of this new campaign to be named as Ethan Hawke and we have our next version of the Film saga ‘Mission Impossible’. (Cue theme tune from Mission Impossible!).

So, what do you people who do own more than one property need to do? – First of all, if you haven’t told us at JCL (Jones Cooper Limited) that you do own a second house, then now is the time to do so. There can still be time to put in place some Tax Planning and reduce or possibly even eliminate the issue of CGT (Capital Gains Tax). – Secondly, if you have recently sold a second house, then we need to know right now, before the Taxman catches up with you. Again, Tax Bills can be reduced if we are aware of this!

Anyone who requires any further advice or help on property ownership or property issues, then please contact me as I will be happy to assist further.

Rickey

Rickey Cooper FFA, FMAAT, ATT
JCL – Jones Cooper Limited

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