Using data from the UK Land Registry, HMRC will be writing to taxpayers who they believe have disposed of a property (which was not their primary residence) in 2018/19, but have not declared any Capital Gains Tax in respect of the disposal on their tax return.

A Capital Gains Tax (CGT) liability can arise where a property is gifted to an individual or a company, as gifts are also treated as a disposal for CGT purposes.

Another point that can often be missed by taxpayers is that properties which have been an individual’s primary residence at some point, but not throughout the whole period of their ownership, can give rise to a CGT liability.

Two versions of the letter will be sent out:

  • Customers who have filed an SA return will be encouraged to amend their return if necessary.
  • Customers who have not filed an SA return will be encouraged to make a disclosure if any CGT is due.

Where a customer has an agent, a letter may also be sent to the agent. The initial round of letters will be sent between 13 October 2020 and 30 November 2020.

HMRC state that where customers don’t respond, further compliance activity may be undertaken to ensure the correct action has been taken where required.

If you receive one of these letters, we advise you to get in touch with your usual Smith Cooper contact or a member of our private client team in order to determine the most appropriate response.

Further detail on legislation introduced in April 2020, which requires UK residents to submit CGT returns as well as pay any CGT due within 30 days of completion of the sale of residential property, is also available here.