HMRC confirms that CGT property returns must be filed

From April 6, 2020, it became a requirement that all chargeable residential property sales in the UK be reported and the capital gains tax (CGT) due be paid within 60 (formerly 30) days of the sale’s completion. Non-residents are required to report the disposal of a wider group of assets, even if there is no gain.

Prior to the preparation of 2020/21 self-assessment (SA) returns, many transactions that ought to have been reported on a CGT property (PPD) return were not discovered. After a SA return has been submitted, it is not possible to submit a CGT PPD return online.

HMRC has previously advised that the CGT PPD return should be filed before the relevant SA return. In the interests of meeting the SA filing deadline and given the difficulties with the CGT PPD system, many taxpayers and agents filed the SA return without first having filed the CGT PPD return.

It is unsatisfactory that it has taken HMRC almost six months to reach the decision that, where the SA return has already been filed, the CGT PPD return must still be filed, but on a paper return. However, this decision was somewhat inevitable. It would have been inequitable to excuse some taxpayers from the filing requirement or not to charge penalties when they have been charged to others who filed late.

The only exception to the requirement to file a CGT PPD return is when the SA return is submitted within 60 days (or 30 days, as appropriate) of the transaction’s completion. In this situation, the legislation is written so that a separate CGT PPD return is not required.

The earliest paper filing of unfiled CGT PPD returns should be done by agents and taxpayers. Where a 64-8 permission is held, HMRC shall issue a paper CGT PPD form to report a disposal of UK residential property to the agent on request when they phone the agent dedicated line.

Interest and penalties will be assessed by HMRC. By 31 January 2022, the taxpayer will have typically paid the tax for a disposal in 2020–21. When the payment was made, the accrual of interest would have ended. The professional groups have requested that the six-month delay in HMRC deciding how the returns should be filed be taken into consideration for calculating late filing fines.