Agent had no understanding of capital gains tax law

In October 2015 the taxpayers sold a property but failed to include the sale in their 2015-16 self-assessment tax returns. In May 2018 HMRC requested details of the disposal as a result of obtaining information from the Valuation Office.

The taxpayers’ agent said the disposal was for the ‘sole purpose of repaying a personal guarantee’ to a bank.

HMRC requested a capital gains tax computation which the agent provided in October 2018. The computation included deductions for a redeem mortgage figure of £186 345 and a personal guarantee of £152 016 as well as for legal fees and an estate agent’s commission.

HMRC said issued assessments allowing legal fees and stamp duty land tax but not for the redeem mortgage and personal guarantee amounts. It also charged penalties on the grounds of deliberate inaccuracy.

About a year later after much correspondence between the agent and HMRC during...