HMRC has announced a new campaign for individuals who have previously sold a residential property either in the UK or abroad which is not their main home and have not informed HMRC of the sale.
HMRC are clearly interested in possible capital gains tax on the sale of a second property which is not the main residence. However, due to the recent slump in the housing market, any sale of a second homes in recent years may have resulted in a loss as opposed to a gain.
Irrespective of the position, individuals should take this opportunity to put their tax affairs in order. It should also be borne in mind that where losses have been incurred these can be set against future gains, but individuals should be aware of the time limits, namely four years from the end of the tax year in which you make the loss.
HMRC may also be looking for undisclosed rental income from the second property.
The campaign commenced on 5 March 2013 and individuals have until 9 August 2013 to notify their intention to make a disclosure. All actual disclosures must be submitted to HMRC by 6 September 2013. The campaign does not offer any enhanced penalty terms, other than making a voluntary disclosure. Additionally, there is no guarantee of immunity from prosecution for the tax offence. Consequently, individuals may wish to consider making a disclosure to HMRC under the terms of the Liechtenstein Disclosure Facility where reduced penalties could be obtained and immunity from prosecution secured.
HMRC have a number of ways of obtaining information regarding property transactions, including Stamp Duty Land Tax forms, Land Registry, third party notices to estate agents and conveyencing solicitors, third party notices to banks, information obtained as part of overseas bank initiatives, property websites etc. it would appear that there is little place to hide if you have not previously disclosed a sale of a second property and do not take advantage of the campaign.
For more information from HMRC's website, click here.