Capital Gains Tax 30-day reporting – being ahead of the game
By Philip McNeill, Head of Taxation (Tax Practice and Owner Managed Business Taxes)
26 March 2020
The roll-out of 30-day reporting for UK property gains is going to bring challenges. HMRC is stepping up communication to taxpayers, and recently published an article property owners urged to get ready for deadline changes to Capital Gains Tax payments. But is this enough to ensure a smooth transition?
As with other digital tax services, HMRC is saying that this will ‘make it easier to report and pay any Capital Gains Tax’. But there are significant practical challenges.
Philip McNeill looks at a specific challenge for agents – being authorised by clients to act on their behalf for the new service.
The challenge of change
Change is challenging. And 30-day reporting of UK property gains is no exception. While the principal change is that HMRC must be notified of the gain, and the tax must be paid, within 30 days of completion, the logistics of using the new reporting mechanism includes some new hurdles. Being appointed as agent is one.
Authorised agents
The new service is on HMRC Enterprise Tax Management Platform (ETMP) and will not be able to access existing client authorities such as a 64-8. Hence the need for new client authorisation for each client using the new service.
With only 30 days to make returns, a significant delay in obtaining authorisation could prejudice timely submission. Clients who do not hold specific documentation to pass Government Gateway Verify, are high risk. So too are those who could be dilatory in taking the additional digital steps needed to secure your appointment as their agent.
Digital clients
While many clients thrive on digital, for many there is no noticeable desire to engage digitally with HMRC. One of the advantages of having a tax agent is that it reduces the need for the client to engage directly with HMRC – online or otherwise.
But the new 30-day CGT reporting service will require a ‘digital handshake’ between taxpayer client and HMRC. The intention is that this is via Government Gateway. Clients would need to pass the Government Gateway ‘Verify’ proof of identity checks to engage with the system. Cue those clients who do not have a UK passport, or employment record and this could be too large a hurdle.
The client will also need to take additional steps once registered to secure your appointment.
Ahead of the curve
The key to being ahead of the curve here is forward planning. It will be essential that clients report gains to you timeously. And it will be even better if you have advance warning at the start of the tax year that there is a likelihood of a property sale.
Two approaches can help make the process run more smoothly:
- Join the trial before April 2020 and get a preview of how things will work. You need a client who is intending to make chargeable UK property disposals.
- To join the trial email ddcw-info-cgtpd-g@digital.hmrc.gov.uk. This will be a practice run, it is not a substitute for real-time reporting of an actual gain. But it will enable you to test the process and be ahead of the game. There are more details on page 3 of Agent update 76.
- Get your client to register as soon as possible – before the gain if this is feasible. This will give time to overcome any difficulties the client experiences in trying to register.
Covid-19
Given the resources being directed at Covid-19, it would not be surprising if the new service is not fully functional by the start of April. To avoid some fast footwork later, why not register for the trial and have the benefit of a pre-view?