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Clare
Clare, Family Solicitor
Category: Family Law
Satisfied Customers: 33532
Experience:  I have been a solicitor in High Street Practise since 1985 and have specialised in Family Law for the last 10 years
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In the settlement of my divorce there was a consent Order whereby

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In the settlement of my divorce there was a consent Order whereby £35,000 was held back by the solicitors who conveyanced the matrimonial house sale to be used to pay the CGT liability on the transfer of our second home from the ex wife's name to mine. A joint expert was appointed to calculate the CGT and this is now agreed. The Order stated that the CGT should be paid and the remainder from the £35,000 split between the parties. Based on the CGT payable I am due about £7,000. The wife's solicitors are threatening to go back to Court unless I agree for the CGT to be paid but the remainder to be held back until HMRC agree the tax calculation. As HMRC do not agree tax calculations this could mean a twenty year wait before I get my £7,000, as that is how long HMRC have to challenge a tax return. I have challenged the wife's solicitors idea that HMRC will agree a tax calculation, but they just said that I had my opinion and they had theirs. What shaould I do to get my £7000 which is now due as the tax should have been paid at the end of January? thanks
Submitted: 2 years ago.
Category: Family Law
Expert:  Clare replied 2 years ago.
Hi
Thank you for your question.
My name is Clare
I will do my best to help you but I need some further information first.
Have you offered a compromise of waiting for say three months to see if HMRC raise a query?
Clare
Customer: replied 2 years ago.

Clare,


 


HMRC have up to 20 years to raise a query. They could raise a query now and another later. If the other side are genuinely concerned about the risk that HMRC might challenge, they need to wait 20 years. 3 months is neither here nor there and if I concede the principle they could delay payment indefinitely. The Order says that the distribution should be paid out once the tax is paid, I see no reason to go against the Order. Are you saying that Judges dont know how HMRC work and so I am at risk of an Order being made against me through the ignorance of a Judge?


 


thanks


 


Peter

Expert:  Clare replied 2 years ago.
Hi XXXXX may well be aware of the 20 year rule but would see that as a wholly unreasonable delay for all the obvious reasons.
What the Judge would not see as unreasonable is giving the Revenue enough time to make an initial check of the calculations
I would advocate offering a three month delay on a take t or we go back to court basis - if only because the timings would more or less be the same anyway.
I know that this is not what you wanted to hear - but there is no point in my not being realistic about the approach the court is likely to take
Clare
Customer: replied 2 years ago.

Clare, HMRC do not "make initial checks of the calculations". They apply a statistical analysis (by computer, instantaneously on filing) across all self-assessment returns and identify some as outliers and some are selected on a random basis. They then work through those in a priority known only to HMRC. Where do you get the idea that HMRC "make initial checks"? Are you saying a Judge is likely to have the same belief about how HMRC works? How can I prove to a Judge that HMRC works the way I have said? I have just spoken with HMRC who confirm what I have said (which my and every other accountant in the country will confirm). thanks

Expert:  Clare replied 2 years ago.
Hi Peter
You say that the HMRC
" identify some as outliers and some are selected on a random basis"
At which point no doubt letters are sent querying the matter
However instantaneous the assessment it takes time for letters raising queries to be generated processed sent and received - so there has to be a period to allow for this - be it three days three weeks or three months
So I have to ask - is it worth the wait to prove your point?
If you make this compromise offer then the money will be released in three months time - or two months or whatever short period is agreed.
Alternatively you will have to go to court to enforce the matter - at which point you can produce the written evidence as to how it is dealt with - but time will have passed and costs will have risen.
Clare
Customer: replied 2 years ago.

Clare,


 


The way it works is that self-assessment returns are selected for review instantaneously, but then reviewed manually, following a priority set by software. It is possible that this one could be reviewed immediately, but also possible it might not be reviewed for a year. As I explained before, technically HMRC have up to 20 years before one can say the return is "agreed" (or at least "accepted") though of course, in practice, after a year the probability of a challenge is low. My concern with your proposal is that if I concede the idea of a delay, I have no basis for restricting it to three months - they could ask for a year and I would be in a sticky position before a Judge to explain why it should be three months rather than a year. (or two years, for that matter). the wording in the Order is: The first available £35,000.00 [from sale of FMH] shall be set aside for the payment of any capital gains tax liability incurred in respect of the transfer of the Welsh Property. That sum is to be held by the conveyancing solicitors in the absence of the parties agreeing any other mechanism to retain those funds after the sale but before the payment of the agreed capital gains tax. Any funds available after the payment of the agreed capital gains tax shall with accrued interest be divided equally between the parties." Now the amount of the CGT has been determined by a joint expert and was due to be paid last week. Can you see anything in the wording of the Order that suggests there should be an interval between tax paid and division? And should I sue the ex wife or the conveyancing solicitor who is holding the funds? I recognise an agreement between the parties would be preferable to litigation, but my ex wife is very angry that I divorced her and has not been willing to mediate at any stage in the proceedings. thanks

Expert:  Clare replied 2 years ago.
Hi
You cannot sue either your ex or the solicitor
Your option is to go back to court to enforce the order with the costs and delay that incurs
This is why I am suggesting that you agree to a short period to allow the Revenue to confirm receipt if nothing else which is almost certainly all that the Solicitor thinks he or she is asking for
I understand all the points that you are making but the practical answer remains the same - agree to a short period to allow the Revenue to acknowledge receipt and raise any immediate query - 28 days shoudl be sufficient
Clare
Customer: replied 2 years ago.

Clare, I do appreciate the time you are taking over this, but I cannot agree with your understanding of how HMRC work. There is no notion of "acknowledgement" or "immediate query" in how they operate. But please just help me to understand one last thing and I will go away - why can I not sue the conveyancing solicitor or my ex wife? Is the Order not already clear? thanks

Expert:  Clare replied 2 years ago.
Hi
It is not a matter of understanding how the HMRC works - it is a matter of understanding the mind set of the lawyers to bring a swift conclusion.
You cannot sue anyone as what you have to do is apply to enforce the existing order in the Family Court.
So you apply on a D11 available here http://www.familylaw.co.uk/system/uploads/attachments/0002/0835/D11.pdf
with your ex as the Respondent
Clare
Customer: replied 2 years ago.

Clare, sadly I do have a good understanding of the mindset of my ex-wife and her lawyers and it is not conducive to settlement on any reasonable basis. I initially employed a collaborative lawyer but my ex wife employed the antagonistic type and refused mediation which has set a pattern throughout. Please just explain why I cannot sue the solicitor holding the money in the small claims court. It appears to me I have a Court Order which they have no good reason for not following. In fact, I have a letter from them to the other side saying that they think the money should be paid out. They are just afraid that the other side have said they dont want any money to be paid out unless I agree for Mrs Ainsworth to be paid but for my share to sit in the kitty indefinitely - they have not said three months, they have said until HMRC agree the tax. As that is 20 years away its not very reasonable. I believe I have a contract with the conveyancing solicitor to apply the Order and if they dont apply it they are in breach of contract and so a simple small claims matter, no?

Expert:  Clare replied 2 years ago.
Hi
No I am afraid that there is no such contract in place - so there is no breach of contract that you can take action on - and frankly attempting to do so will simply make you look litigious.
The conveyancing solicitor cannot release any funds until both parties authorise it.
To resolve the issue you go back to the family Court to enforce the order
Clare
Clare, Family Solicitor
Category: Family Law
Satisfied Customers: 33532
Experience: I have been a solicitor in High Street Practise since 1985 and have specialised in Family Law for the last 10 years
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