09 Sep Reducing the risk of PPR relief
Many people assume that selling your main home automatically exempt from any capital gains tax. In some cases, this isn’t the case and getting this wrong can be very expensive.
The law requires more than simply owning the home and occupying it. It requires actual residence which can be defined as continuous occupation of a dwelling as a main home. There are certain periods of exemption for where an individual does not reside in the home which are beyond this blog – contact us to find out more.
Where you sell your main home it is important to notify your advisor of this even if you believe the sale will be exempt from capital gains tax. This can be very useful in the event you have got some of the facts wrong. If a tax bill was due and in not correctly disclosing and paying capital gains tax due then you may be charged by HMRC under a ‘failure to notify HMRC of a liability to tax’.
Such a failure is automatically deemed by HMRC to be a deliberate error and there is no obligation on HMRC to prove carelessness or deliberate error. Penalties for a deliberate error can be higher and opens up a 20 year window for HMRC to investigate.
By notifying your advisor and ensuring the sale of a main home is disclosed to HMRC, the window of enquiry open to HMRC is reduced from 20 years to one year! It further puts the onus on HMRC to prove carelessness or deliberate error.
AJN Accountants are specialists in helping contractors, freelancers and small businesses to save tax and time.
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