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Taxation readers discuss capital gains tax reporting for the disposal of residential property and the super deduction.
Reporting the disposal of residential property
The article ‘Remember the deadline’ by Jenny Marks (Taxation, 3 December 2020, page 12) was helpful in giving a summary of the requirements for reporting the disposal of residential property in view of the fact that a client was disposing of his holiday home. Following the advice given by Jenny, I logged into my usual agent account and attempted to start the process, but there was no link as described and all the other possible links did not work.
I therefore had to contact HMRC and I then became aware that there is a distinction between an ‘agent services account’ and an ‘agent services dashboard’. The latter is used for self assessment and PAYE, but the former is needed under the new capital gains reporting regime. I asked my client to set up a government gateway account and he was able to create the required 15-digit reference. Next, I had to return to the agent services account and find where to enter the reference which enabled me to write to my client again, quoting a web address in order that he could complete the authorisation.
Why is HMRC making it difficult for agents to act? Surely it should not be necessary to obtain a separate authority when the agent already has a general authority to act for self assessment. After all, the gain will need to be reported in the self-assessment tax return in the normal way. And why does the agent need a separate government gateway account?
As paper is now frowned upon by the Revenue, there is obviously no hope if a separate authorisation is needed of having a straightforward system similar to the one we have with the 64-8. Or perhaps I just request a paper return to report the disposal, if I do not mind waiting an indeterminate amount of time for the Revenue to answer the telephone but it seems HMRC will not send one directly to me, as I am a mere agent.
Ian Cruse.
Super deduction
In response to readers’ queries, Nigel May has provided additional clarifications to his article ‘All it’s cracked to be?’ (Taxation, 25 March 2021, page 18).
Question 1. The examples do not seem to take into account the fact that the 130% balancing charge on the disposal of super-deduction assets relates to disposals before April 2023. The multiple only applies to balancing charges in periods ending prior to April 2023 or periods that straddle the period.
Question 2. The article states that proceeds received in the period to 30 June 2025 for an asset on which the super deduction was claimed would be multiplied by 1.3 to give a balancing charge. But the draft legislation suggests the ‘relevant factor’ of 1.3 would only apply for periods ending prior to 1 April 2023.
Reference has been made to the application of clauses 12(6-9) of the 2021 Finance (No2) Bill and the application of the 130% uplift in the balancing charge for accounting periods that straddle 31 March 2023.
Clearly, for accounting periods that end prior to 1 April 2023, where qualifying plant and machinery has been acquired but then disposed of, one could put forward the notion that there is ‘fairness’ in clawing back the super deduction obtained through an immediate balancing charge where the items on which the super-deduction has been claimed are sold. However, there will be cases where the immediate balancing charge will be more onerous than if the expenditure had been placed into the main capital allowance pool, where the main pool value has accumulated over time.
For accounting periods ending after 31 March 2023 the uplift on the balancing charge is tapered downwards, however, the underlying point of the illustration was:
1) Claiming the super deduction where one can see no future sale of the assets due the scrappage makes sense and in the absence of a sale, does not probably need to be considered further.
2) Claiming the super deduction where there is a pattern of replacement of plant needs to be looked at more critically from a viewpoint of maximising relief particularly against the backdrop of the immediate balancing charge on the sale of items on which the super deduction has been claimed. The analysis here will depend upon the facts of each case and in particular the impact of AIA on the main pool.
