The HMRC collected an additional £140 million via investigations into unpaid Capital Gains Tax (CGT) over the last year* shows data provided by HMRC to Collyer Bristow.
Collyer Bristow explains that £55 million of the extra CGT related to investigations into ‘wealthy individuals’ and mid-sized businesses, whilst the remaining £85 million was obtained from everyday taxpayers and small businesses. “The statistics make clear that this area remains one of focus for the Revenue, and that taxpayers across the board should ensure that they have their tax affairs in order.” Collyer Bristow explains that CGT is paid on the profit made when disposing of an asset. This includes selling the asset, transferring ownership, exchanging it for gain or getting compensation- for example via an insurance pay-out.
The figures highlight that changes to the rates of CGT were introduced in last year’s Budget. The new rules mean that the higher rate has been reduced from 28% to 20% and basic rate from 18% to 10% from April 2016. The government has taken steps to cool down the burgeoning property market, most notably by the introduction of the higher rate of CGT which applies to disposals of residential property from 6 April 2016 and the introduction of the new higher rate of SDLT on purchases of additional residential properties from 1 April 2016.
James Badcock, Partner at Collyer Bristow, comments: “The Revenue has kept the spotlight on CGT avoidance schemes, abuse and error over the last year. It has proved a fruitful area for enquiries and they are likely to continue in this vein “A continuous stream of high profile tax avoidance cases in the media- including the Panama Papers scandal- means that pressure on HMRC to stamp out what it sees as abuses remains intense. At least a proportion of the additional revenue is likely to relate to deliberate or calculated underpayment. Marketed schemes exist to reduce the amount of tax on the disposal or transfer of an asset. They employ a range of mechanisms, including the creation of artificial capital losses to offset the tax.”