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bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4808
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I am a pensioner and have savings invested which give me a

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I am a pensioner and have savings invested which give me a monthly return
In 2012 I was advised to move £25,000 form one investment company to another which would give a better return :which I did
The money went from the first company to the other through my bank over a period of 8 days
Earlier this year I received a letter from HM Tax saying this should have been declared and that this money was considered a capital gains tax, was a chargeable event and consequently put me into a higher bracket (prior to that I was not paying tax )and that I owed HMTax £523.
I have argued that I did not handle the money ;That my income is the same as before and that I am not in a higher tax bracket but to no avail Today I received a letter demanding payment which is now being charged with interest
I think this is very unfair
What can i do?
Hello, I'm Keith and happy to help you with your question. In a few words, not a lot. You are in deep trouble with HMRC who appear to be acting correctly.

Unfortunately, the change of your investment does give rise to a possible exposure to Capital Gains Tax (CGT). CGT is chargeable upon the gain only, ie the difference between the price you paid for the original investment and the price you received for it when you did the swap. This gain should have been declared on your annual self assessment tax return. You have an Annual Exempt Allowance (AEA) of 11K to offset this gain. Any excess is then taxed at 18% or 28% or a combination of the two rates depending on the income including the gain in the year of sale. It is this addition which has clearly put you into a higher tax bracket. You cannot rely on HMRC not sending you a self assessment form to complete. It is your responsibility to self assess if you have received moneys upon which tax has not been paid.

HMRC are entitled to any tax due and may in addition charge penalties and simple interest. The only way out of this might be if the gain is below the AEA, but even so it should have been declared and HMRC can still insist on penalties for failing to make a return. Check that HMRC are only taxing the gain, not the capital amount; it is not unusual for them to get hold of the wrong end of the stick if they can even find the stick at all! I recall once having a declared capital loss charged as income received, so mistakes do occur, with depressing frequency!

I suggest that your financial adviser has a lot to learn about personal taxation. Please remember it is only the gain less the AEA which is taxable. So sorry to have to rain on your parade.
Customer: replied 3 years ago.

Thanks Keith I was hoping for happier news but it looks like I will have to pay up.

This "adviser " admitted to me that he did not know that moving funds would incur the penalty it did Whereas I would have thought moving funds was his job I feel he should contribute to my expense but don't know how to enforce this because he has gone into semi retirement


Any views on that would be gratefully received

You could sue him in the Small Claims Court if you feel so inclined where there are no costs awarded. I have had to do this on several occasions, but I do have some experience of court work. Also in England and Wales the case may be moved to another court location which cannot happen in Scotland where I reside.

Please make sure that HMRC are only taxing the gain element, not the capital sum. If they have made a mistake they might drop the whole caper. Always bear in mind Benjamin Franklin's dictum that in life there are but two certainties, death and taxes.

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Thank you for your support.
Customer: replied 3 years ago.

Sorry Keith I thought I had relied saying how much I appreciated the advice you gave me

Delighted to be of assistance.
Customer: replied 3 years ago.

I gave you a rating on 2 occasions perhaps I am not entering it correctly

I am grateful for your assistance and reluctantly am in the process of writing the cheque right now. I go on holiday tomorrow and hope to forget about this on going niggle!!


Many thanks for your help

Horrid isn't it when HMRC catch up with you!