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bigduckontax, Accountant
Category: Tax
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Bought and sold a house in 2005/2006 as an investment with

Customer Question

Bought and sold a house in 2005/2006 as an investment with my wife. Made a number of improvements to the property including extension, new plumbing, new elecs, new kitchen and bathroom.
Sold the property and filled out my tax return accordingly and paid tax on the gain. Didn't fill out a tax return for my wife as I was under the impression that once CGT allowance was consumed, my wife would still enjoy a personal allowance which would more than cover the remainder of the gain.
Was contacted by HMRC in July regarding this. Clearly the personal allowance for my wife does not come into play and therefore there would be an outstanding tax liability of around £150 from that time.
HMRC are now asking for full details of all expenditure we made on the property. As it is so long ago, we no longer have this. My bank tells me they cannot help either (again due to the age of the transactions). HMRC are saying that unless we can provide evidence of the enhancement expenditure they cannot make allowances for this despite the fact that I am not required to keep these records any longer.
I have offered to pay the outstanding tax plus interest and have suggested that on the basis that HMRC have clearly accepted my own tax return as acceptable then the same logic should apply to my wife's tax liability. HMRC however are insistent and are suggesting that we contact all the tradesmen who worked on the project to provide the evidence. I very much doubt I could remember all of them and pretty sure they wouldn't have kept records going back that far.
Would like to know where I stand on this
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.
One could say, in a word, stand aside, but if one did that to the taxman he would get away with blue murder!
Your resource st this stage is to hammer away at the the office in question. As the query rises through the hierarchy within the office it will move from clerical level until it finally reaches come official with a shred of common sense. I recall doing this on one occasion until finally I took the slightly risky step of asking the case to be referred to an Inspector with a rather greater knowledge of Corporation Tax than was currently being displayed. The result was an immediate apology from the head of that particular office and an acceptance of the position I had been arguing for some time!
So, get down to the word processor and keep plugging away at the relevant office. They simply cannot ask for written evidence in respect of a matter in which their own advice to taxpayers is that such data need not be maintained beyond a certain time. That said my Mother, who was responsible for the introduction of PAYE into the BBC in the 40s, always said to keep every scrap of paper in respect of taxes. My files go back to when I started work in 1961 and reference to letters written long times past has often been useful accompanied by wails from the taxman that their files don't go back that far to which I can retort that mine do! HMRC can try, but simply cannot on the one hand accept your return and on the other refuse your wife's.
Any assessment they raise should be the subject of an appeal. Just keep on batting their letters back until they finally get fed up, takes a long time, or the letters reach a level where the stupidities being displayed are resolved. If necessary take the case to a tribunal or, even better, simply complain to the Ombudsman. Somewhere down the line common sense must kick in.
Sorry to be so long winded in my reply, but you yourself can see in what a silly situation HMRC are placing themselves, the left hand not knowing what the right is doing. You are, I fear, in for a lot of letter writing before you are through with this matter.
I do hope I have helped you with your conundrum.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3612
Experience: FCCA FCMA CGMA ACIS
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Customer: replied 2 years ago.

Keith,

Many thanks for your reply. I have to say that your email aligns very much with my own thoughts on the subject and it's encouraging to have the moral support of an expert in such matters.

I will remain resolute in my position. Thanks again for your informative and somewhat amusing response.

Regards

Tim

Expert:  bigduckontax replied 2 years ago.
Thank you for your support, Tim.

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