HMRC's latest one-to-many letters are being sent to taxpayers who have disposed of shares and omitted share disposals from their tax returns.
The letters detail what a disposal for Capital Gains Tax (CGT) purposes is, and When CGT may be payable, noting that special rules may apply in some cases such as:
- Share reorganisations.
- Gift Relief claims.
Recipients of the letters are asked to check whether they need to amend their tax return to include the share disposal that HMRC have identified. Where the disposal needs to be reported, taxpayers are given 60 days from the date of the letter to do so, or potentially face an enquiry.
Where the affected tax return is out of time for amendment, HMRC will need to raise an assessment. Individuals in this position have 60 days from the date of the letter to give HMRC the information they need to raise their assessment, including:
- Disposal proceeds.
- Acquisition costs.
- CGT due.
- Details of why the gain was omitted.
Taxpayers who are satisfied that they do not have a CGT liability are instructed to write to HMRC and explain why no CGT is due on the particular disposal that HMRC have identified.
Useful guides on this topic
At a glance: Reporting CGT when & how?
How do you report your capital gains? What return do you use? There are different ways for individuals to report capital gains depending on whether you are resident or non-resident, and whether you are in or out of Self Assessment.
CGT: How to calculate a capital gain or loss
How do you calculate a capital gain or loss? What costs are deductible? Can you set losses against capital gains?
CGT: Date of acquisition or disposal
When is the date of acquisition or disposal of an asset for Capital Gains Tax (CGT) purposes? When do special rules apply? Why does it matter?
CGT: Holdover/Gift Relief
Holdover relief is available when an individual makes a gift to another person (individual or company). When is the relief available? What are the conditions that apply? What restrictions are there?
Share-for-share exchanges
How does tax relief for a share-for-share exchange work? What are the rules for an exchange of shares or securities? Are there anti-avoidance rules to consider? Is tax clearance needed?
External link
ICAEW: HMRC prompts disclosure of CGT liability on sale of shares
