Further to my colleagues blog of 13 October 2020 advising that Airbnb are sharing details of people that have been letting out their property, it has also been reported that HMRC will be sending out over 14,000 “nudge” letters in the coming months to people who they believe have sold their residential property and have a capital gains tax liability that they have not declared for the 2018/2019 tax year.

HMRC are getting their information from the land registry so will not necessarily know whether there is actually a gain to be declared on the disposal. My advice is that if you do get a “nudge” letter from HMRC that you send a letter in response even if there is no gain because for example the property has been your main residence throughout the time that you have owned the property. You simply need to state in the letter the reasons as to why there is no taxable gain.

To do nothing following receipt of a letter could be detrimental and could result in HMRC opening an enquiry into your tax affairs.

Therefore, if you, or someone you know, has an undeclared capital gain on a disposal of a residential property, my advice would be to act now, to minimise any interest and penalties that HMRC will charge on any unpaid tax. The penalties are lower for an unprompted disclosure than those for a prompted disclosure, which is what it will be if you receive a “nudge” letter from HMRC and then subsequently declare a capital gain.

If you or someone who know needs any assistance in making a disclosure to HMRC please let us know.