If action is not taken HMRC may amend the tax return or open an enquiry into the form. This could lead to unnecessary discussions about undue tax, penalties, and interest. Failure to respond to HMRC’s campaign could mean additional tax being payable.
There are good reasons for having these rules in place to prevent individuals avoiding CGT when disposing of assets. However, this is a clear example of the information gap that exists on important tax matters. A disposal can cover many more situations than a sale where cash is received.
Relief is available where the appropriate conditions are met. HMRC needs to do much more to raise awareness that where a tax relief is available, a valid claim needs to be made before it applies.
Any claim is at risk of rejection if it is not made within prescribed time limits or in the correct format.
Guy Sterling is a tax partner with Moore Kingston Smith
