Updated: Aug 5
What I am about to say next won't apply to most people. But when it does apply, it becomes important.
Picture the typical scene. Ian Vestor is a client who has a rental property.
He decides that he might want to sell it. He consults his trusted accountant, Adam Upp, in late 2019 about selling it and Adam gives him some rough figures of tax at stake. Ian goes away and thinks about it. The price doesn't move much, and he sells the property in late April 2021 without mentioning it to Adam.
He knows he has to pay tax and thanks to Adam knows roughly how much. He is astute enough to be aware that it falls in the 2021/22 year, that it will go on the tax return that is due on 31st January 2023, which he'll take to Adam on the (ahem) 28th January 2023.
What has Ian done wrong ? Aside from the cardinal sin of only giving his long suffering accountant three days to do his tax return - he will find himself with interest and penalties to pay, despite filing the self assessment return in time.
And the reason ? From 6th April this year, all disposals (including gifts) of residential property that are not otherwise exempt have to have a'real time tax return' submitted - and the tax paid - within 30 days of the sale completing.
And in that time there are a number of steps that need to be taken with HMRC - registering a new account through a Government Gateway, giving the accountant authority to act (entirely separate to the normal self assessment authority). Any information that may be missing as to base costs, improvements, valuations etc need to be found.
The moral of this story:-
- Before you sell, talk to me and see what information might be missing
- As the sale process is going on, let me know so that I can factor in the time for doing the real time tax return.
- Make sure you don't commit all the sales proceeds for other purposes with a view to finding the tax later
- As soon as it completes, let me know.
What are my positives today:-:
1.I've just filed my first Real Time Tax Return for a disposal of a residential property
You probably guessed that....
The client (funnily enough not called Ian, but then I'm not called Adam either) was well organised and told me the day after completion. He responded to every request I sent immediately by return. A couple of HMRC system glitches later and we still only just got there, 26 hours before the deadline.
2. Parental leave and fuloughing
It's all well and good to close off furloughing of staff to new entrants after 1st July, but there was a forgotten class of people - those on parental leave returning to work after 1st July.
It won't affect many, but would have a material impact on those that were affected. Happily the rules have been amended to allow new entrants to furlough if they had been on parental leave.
There are many businesses that haven't been eligible for the rates relief grant who might otherwise have been. Those working from home are one type, equally those who pay a service fee to occupy a business premise. Local authorities have been given a discretionary pot to pay amounts from to those who have, in official parlance 'fallen through the cracks'
Your local authority website would be a good place to start if you think you might be in a crack.
(Sorry, I have just realised that I have 'pot' and 'crack' in the same sentence. If you get raided by the Drugs Squad tomorrow it will be my fault. Weed best be careful)
What am I talking to clients about today ?
The time it's taking to get things donehas been a subject of whingeing today. For example a bank (the manager concerned isn't on the mailing list, so those reading can breathe a sigh of relief) who promised a facility in early February, nothing has changed in the business but for whom we are still waiting for the facility to be available in June. The reason ? Well, you know what it is.
Another example - tax enquiry that I've been trying to close since January, all points agreed and the tax paid, the letter of agreement still waited for five months later. The reason - guess...
I'm sure we can all think of examples ourselves - we're going to have to get a whole lot more patient over the coming months.
Until tomorrow, stay safe, stay positive
Please - if you do read this far and feel inspired to forward it to anyone and everyone, please do so.