News
Sinead Moore 16 Feb 2017 01:31pm

HMRC collected extra £140m in Capital Gains Tax last year

HMRC collected an additional £140m last year, following a crackdown on Capital Gains Tax (CGT) avoidance, City law firm Collyer Bristow has found

Data provided by HMRC revealed £55m of the additional CGT take came from investigations into "wealthy individuals and mid-sized businesses", whilst the remaining £85m was obtained from everyday taxpayers and small businesses.

Collyer Bristow warned taxpayers across the board to ensure they have their tax affairs in order if they wish to avoid “lengthy investigations and hefty penalties”, as CGT investigations remain an area of focus for HMRC.

“The Revenue has kept the spotlight on CGT avoidance schemes, abuse and error over the last year. It has proved a fruitful area for enquiries and they are likely to continue in this vein,” James Badcock, partner at Collyer Bristow, said.

He added that recent high profile tax avoidance cases have put increased pressure on HMRC to stamp out tax abuse.

Badcock highlighted that while a proportion of the penalties relate to “deliberate or calculated underpayment”, there are also taxpayers who make “genuine mistakes” or “simply fail to declare or undervalue an asset which has been disposed of or transferred, thereby cutting CGT collected”.

“Determining where and how much capital gains tax should be paid can be complex.

"Complications often arise when family members are involved, for instance," he said.

“Increasingly, we are seeing cases where parents transfer property to their children, usually as part of a lifetime gifting strategy to ultimately reduce exposure to Inheritance Tax. These transfers can give rise to a chargeable gain and where this goes unreported, the Revenue is likely to investigate,” he added.

A spokesperson for HMRC said, “The vast majority of people pay the tax they owe. As these figures clearly show those who try to get around the rules are always challenged by our specialist tax collectors, to ensure that they pay the correct amount of tax due.”