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Sam
Sam, Accountant
Category: Tax
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Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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My predicament is this, I have a company and use an accountant

Resolved Question:

My predicament is this, I have a company and use an accountant for the company.
I used to live in Doncaster and now in London full time. During my time living in Doncaster I bought a house in London for Monday to Friday and when I moved to London full time it was rented out.
I recently decided to sell the house that was rented and my house in Doncaster and asked the accountant about Capital gains. Their advice was to move into the house I wanted to sell for 3 months and move my electoral role, bank, Credit cards etc and I would be exempt from Capital Gains.
This I did and the house sold last year all fine.
When my tax return went in right on the limit of time as always (prepared by the accountant) it showed I had 10k Capital gains to pay. I challenged them and they immediately said they had more information and hadn't added it and the liability was actually 7.5k ?
I have told them I will be seeking advice as they specifically told me I wouldn't pay any tax.
I have nothing in writing but, they are not denying they gave me that advice.
Is this something that is worth pursuing do you think please ?
David Stephenson
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.

Hi David

Thanks for your question - I am Sam and I am one of the Uk tax experts.

First the advsie your accountant gave you regarding a 3 month move into the hossue does appear to be wrong, as you cannot simply wipe out the fact that an occasion arose on this property for capital gain purposes.

However - can I ask

1) Was it the house in Doncaster that was rented out or the one in London, as your opening paragraph is confusing

I get that you lived in Doncaster - then bought a house in London, which you stayed at whilst you worked there Mon to Fri - then I assume you already owned a property in Doncaster - which you then moved out and its that property (in Doncaster) you rented out and sold, on which the capital gain arises.

If this is correct then please advise

1) When you bought the property in Doncaster- how much for and was this in your sole name

2) Did you carry out any capital iomprovements on the property in Doncaster - such as new bathroom or kitchen etc - if so please advsie what improvements and how much you spent (approx)

3) When did you leave the property in Doncaster - to move full time to London - and is this the same date that the rental income began

4) Did you declare all rental income to HMRC

5) What dates did you move back into the property for

6) when did you sell the property - and how much for

I can then advise further

If this is NOT the case then pleae expand on the situation

Thanks

Sam

Customer: replied 2 years ago.

Sam

Thanks for this.

I have confused you !

Its the house in London that I sold and it was rented out and I did make capital improvements and that was why the tax bill came down from 10k to 7.5k (approx) when the accountant allowed for the capital repairs etc.

All rental was declared.

I bought the property for 190k around 10 years ago and sold for 320k.

I still have my property in Doncaster and that is up for sale too.

Is that okay.

David

Expert:  Sam replied 2 years ago.

Hi David

Thanks for your response

So when did you live in this property as your main residence? As it would appear that you lived full time in Doncaster initially and just came to London Mon to Fri for work, and then by the time you moved full time to London you did not move into this proprty but renated it out - and then sold it -

What capital repairs did you carry out as you have made a £140K profit

And I cannot advsie whether HMRC are right with the capital gain bill without having all the facts and figures and dates

Can you clarify

Thanks

Sam

Customer: replied 2 years ago.

The Capital gain was more to do with the hike in London property prices than work done, although I spent around 20k on it over the period.

My point is more about the accountant and their wrongful advice and if its worth pursuing a claim against them for giving me the wrong advice.

I may well of kept the property if I had known I was facing a bill. I sold as they told me I wouldn't have any capital gains to pay.

The upheaval of moving bank accounts,credit cards etc was hideous and I did it to save capital gains ?

David

Expert:  Sam replied 2 years ago.

Hi David

Thanks for your response

I cannot establish that you were offered wrong advsie - as I have yet to see what actually was the timeline and the costs and the position HMRC now argue arises, which differs from what your accoutant offered on.

So whilst it would seem they they advised your move in for 3 months prior to sale would wipe out any capital gain position - I cannot give a full answer unless I have the full timeline and my questions answered, which I am sure you can appreciate.

As this 3 months would not have intially deemed to wipe out the full capital gain timeline that had arisen so far - it, would, however allowed a claim alsofor Private lettings releif and with the allowable costs and any additional private residence relief due- might have reduced this gain anyway -

But I am sure you can appreciate to offer a water tight answer - and on that bsis how to take this matter forward with the accountant and HMRC I need the facts ....

Thanks

Sam

Customer: replied 2 years ago.

Sam

I will draft a full answer rather than rushing it with all the time lines, costs etc. This will take me a day or so if thats okay ?

David

Expert:  Sam replied 2 years ago.

Hi David

That is fine

Then I can sort out the correct capital gain position AND see if you have any recourse from the advise given

Thanks

Sam

Sam, Accountant
Category: Tax
Satisfied Customers: 13777
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
Sam and other Tax Specialists are ready to help you
Customer: replied 1 year ago.

Sam

I have asked the accountant if we can settle the dispute without taking legal action.

They have asked for a settlement figure and I have said £2500.

If this is accepted I feel it will be a much easier way forward.

I will keep you informed.

David

Expert:  Sam replied 1 year ago.

Hi David

Thanks for ythe update on the situation

Thanks

sam

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