It was announced that from the start of April all Capital Gains Tax (CGT) from residential property sales where tax is due would have to be reported and paid to HM Revenue & Customs (HMRC) within 30 days of the date of completion of the transaction.
However, HMRC has now confirmed that it will not charge late filing penalties for reports of CGT on disposals of UK residential property by UK residents made by 31 July 2020 that are made after 30 days.
The announcement, made during an HMRC question and answer factsheet shared with ICAEW’s Tax Faculty indicates that despite the change in rules, taxpayers will not be fined for a breach of the regulations.
HMRC stated: “To help those selling properties familiarise themselves with the change in the rules and a new on-line process, HMRC is allowing a period of time to adjust and will not issue late filing penalties for CGT payment on account returns received late up to and including 31 July 2020.
“For UK residents, this means transactions completed between 6 April and 30 June 2020 and reported up to 31 July 2020. Transactions completed from 1 July 2020 onwards will receive a late filing penalty if they are not reported within 30 calendar days. Interest will accrue if the tax remains unpaid after 30 days.”
It is thought that the temporary loosening of the rules is designed to help those struggling to contact agents or report CGT as a result of the Covid-19 pandemic.
ICAEW Tax Faculty said that the Q&A seemed to suggest that the relaxation in the deadline only applied to UK residents and not for non-residents who have already had the rules applied to them.
Rufus Ballaster, head of Property at Carter Lemon Camerons LLP points out: “Whilst the charging of late penalties has been postponed temporarily interest will still run on the CGT due, so filing and paying as soon as possible is still highly recommended where possible.”