Q&A: CGT penalty warning for one-off transactions

HMRC may agree to suspend penalties relating to careless inaccuracies in tax returns if compliance with one or more conditions of the suspension would help the taxpayer avoid becoming liable to such penalties in the future. Cox and another (TC9198) highlights HMRC’s approach to penalty suspensions in relation to capital gains tax (CGT) specifically one-off events.

What was the issue?

This case considered an appeal by the taxpayers in relation to penalties charged by HMRC following an erroneous claim that entrepreneurs’ relief (ER) (now known as business asset disposal relief (BADR)) applied to a disposal of shares.

The taxpayers had received a preliminary indication from their advisers that ER may apply to a disposal of their shares. However without personally taking additional tax advice on the impact of gifting shares on their entitlement to ER they each subsequently gifted some of their shares....