From 6 April 2020 disposals of UK residential properties and the associated capital gains tax (“CGT”) are broadly required to be reported and paid within 30 days. Over the course of the last few months, representations on various issues being experienced with the CGT UK residential property disposals service and its related guidance have been and continue to be discussed with HMRC.

Following a recent bespoke meeting, HMRC has been working to provide a temporary solution to allow taxpayers to offset a UK property disposal return CGT overpayment against another Self-Assessment tax.

An interim process has now been implemented for this. Unfortunately, this process does require taxpayers to take an additional step in contacting HMRC following submission of their Self-Assessment, which HMRC agrees is an inconvenience. HMRC is however working on a longer term solution to the offsetting issue.

In the interim period the process to be followed is as follows:-

• After submitting an in-year UK Property Disposals return, if the user needs to amend their return, they can do so via the UK Property Disposals return service or via their Self-Assessment tax return;
• If they amend via the UK Property Disposals return service, and their liability reduces, they can claim a repayment via the service. This will then be processed by HMRC;
• If the user chooses to amend via Self-Assessment, they should complete the Self-Assessment tax return with their overall CGT residential property gains and the total gains or losses and tax charged via the UK Property Disposals return service;
• After all relevant sections of the Self-Assessment tax return are completed, the user should go to view the calculation section and tick the option to “view and print your full calculation”.

An example is as follows:-

• The user can then pay the difference, which is due by 31 January after the end of the tax year, between the income tax, CGT and Class 2 NICs due figure and the CGT calculated as overpaid figure. In the example above this is £1,851.87 (£6,795.87 less £4,944.00);
• The user should then contact HMRC by telephone on 0300 200 3300 to enable HMRC to make a manual adjustment. If any further action is required by the user, HMRC will advise what that is;
• If the user chooses to make payment in full of the income tax, CGT and Class 2 NICs figure (£6,795.87 in the above example), they should contact HMRC to request a repayment of their overpayment;
• Once the Self-Assessment tax return has been submitted, the user should not attempt to amend their UK Property Disposals return for the corresponding tax year.

We are awaiting HMRC’s confirmation that agents will also be able to phone to make this adjustment on behalf of clients and that it can also be requested in writing.

HMRC is also dealing with the wider points discussed in relation to 30 day reporting which we will keep members updated on. It is expected that HMRC will continue to work with the Professional Bodies to discuss and agree a forward plan for updating all the guidance and the longer-term resolution to the offsetting issue.