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HMRC have given me 2 weeks to pay £10'000 advice please?


Homervanderjaz
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Hi, I have received a summary warrant from Sheriff Officers on behalf of HMRC stating I have 2 weeks to pay 10k which is due to capital gains I have made for the sale of property. I called them today and asked for a payment program which would allow me to pay this debt however I was told no and that I have to pay it within 2 weeks or they will start sequestration proceedings. Is there anything else I can do? I dont know how to raise this money and I fear I will lose my house. Thanks for any help

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Hello,

IMO HMRC are a different case altogether than the credit companies you see on here, you will not escape payment of the £10k if you owe it. Do you actually owe the £10k If you do put thedebt in front of all your other creditors as in my experience they will not rest and use any resource they can to obtain that money back from you. The only thing you can do is call them again ask for a face to face meeting with someone who is in a position to make a decision on any requests you have. Ask them to reconsider your offer a payment plan. If they refuse get ready to find the money as quick as possible, I'm afraid the old adage that their is nothing certain in life other than death and taxes still stands true today.

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Hi there,

 

Firstly as already said, HMRC are not to be played with. The have huge and far reaching powers, as technically they are collecting on behalf of the crown - tax evasion of any kind is not taken lightly by them. (not that I am saying you have evaded !!!)

 

Secondly, the bill of 10k may not be accurate at all. (unless of course they have been furnished with all the appropriate details)

 

Capital Gains Tax (CGT) is levied on disposal of an asset where there has been a gain from that asset.

 

Each person has an annual allowance - which is offset against the gain, as can any losses - before calculation of the CGT liability

 

CGT on property is a little different ....

 

Its a bit complex but in a nutshell ...

 

CGT is charged on disposal of a property that is not your main residence. (i.e is an inherited property, buy to let property, 2nd property from marriage or a holiday home .. you get the picture ..)

 

Capital Gains Tax is taxed on the actual gain you have made from the sale of the property ,from the period you have held it to disposal (i.e once any os mortgage and charges have been deducted) .

 

You gross gain is then reduced by the appliance of any unused annual CGT allowance, any taper relief and any indexation (if applicable).

 

As I say CGT on a propery is charged if not your main residence, and is levied on the periods when it wasn't your main residence (which could be for the entire time (- last 36 mths) if you never lived there or on a proportionate basis if you did.

 

The last 36 mths of ownership are classed under HMRC rules that it was your main residence - so its just the period or periods before that the gain is calulcated over.

 

For example ...

 

  • Lets say you owned you house for 10 yrs, lived in it for 7 yrs, then made your main residence another property, say renting out the first one.
  • You do this for 3 yrs and then decide that you would rather sell property 1.
  • Well you lived it in for 7 yrs - so thats exempt from CGT ...
  • Then the last 36mths you didn't live there, but under HMRC rules they deem that YOU did live there, so its also exempt ...
  • Result = no CGT liability.

Second example ....

  • Lets say you lived in house no 1 for 10 yrs, moved out after 4 yrs, and then rented it for the remaining 6 yrs.
  • The first 4 yrs of ownership the property was your main residence - so exempt from CGT
  • The last 36 months (3 yrs) HMRC rules deem that you lived there - so thats also exempt from CGT
  • So we have accounted for 4 yrs & 3 yrs = 7 yrs which are exempt from CGT liability
  • That just leaves 3 yrs of ownership and gain for CGT liability calculation....

As I say any gain is then subject to reducement by your unused annual capital gains allowance, any taper relief and any indexation relief (which depends upon when you came into ownership of the property)...

 

So you see ... the 10k gain demanded by HMRC may not be entirely accurate if they haven't got all the info ...

 

Its complex ... so you may want to have a word with them, ask them for details on how the liability has been calculated, and then get some professional advice from a financial advisor (look for one who has diploma (advanced) status) or a conveneyer Solicitor - to check the correct amount of liability.

 

Having said that if you give HMRC the info I've mentioned, if they have not already taken this into account, they should rework the calc and ask for the revised amount.

 

Either way the amount due may be less than 10k and may make it easier for you to find.

 

I would suggest that as you would have recevied the gain from the property sale in a lump sum, HMRC will probably push for it back in a lump sum, what ever that amount may be.

 

Was CGT not mentioned to you by your Conveyencer which they conducted the sale? As they should have been aware that if the property was not your main residence there would be CGT to pay.

 

There is no escaping tax or HMRC -they will always get their dues - mitigation of tax using allowances etc is legal .. but tax evasion is not and the penalties can be harsh ..

 

Hope this helps

 

Abs x

Edited by Abby25
typo
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