This week's opinion: 27 May 2021

What are we to make of the fact that over 13,000 people received fines for late filing under the new capital gains tax system for residential property? No doubt the Treasury will welcome the additional £1m of revenue but, in the grand scheme of things, that is neither here nor there. The real question is why so many people failed to meet the obligation. We know from the vexed issue of penalties under the high income child benefit regime that many people genuinely did not know about the charge. Presumably the same would apply here. But there is a key difference. Virtually everybody selling a property will have used a lawyer or conveyancer to carry out the sale. It seems that, even if they are aware of the new rules, many of these professionals are not telling their clients about the reporting obligations. This may be due to an excess of caution of accidentally holding themselves out as tax advisers. 

There is a school of thought that we should adopt the principle used in some other jurisdictions (such as France) whereby the agent withholds tax from the selling price and pays it to the tax authority as a payment on account. That might be going too far here, but I see no problem in making it a legal requirement for any professional involved in the sale of a residential property to draw the client’s attention to the need to make a return within 30 days. 

Teething problems with any new system are bound to occur. I was impressed by the ATT note on how the system works and some of the problem areas (tinyurl.com/attprgs), but this reporting issue is surely a design flaw that could be easily fixed.