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New tough reporting regulations introduced

A new capital gains tax charge for non-residents came into force on 6 April 2015 which is likely to impact on UK-based property developers and conveyancing solicitors, as well as non-resident owners of UK residential property, reports Graham Purvis of Robson Laidler LLP.

The new rules apply to UK residential property disposals by non-resident individuals; personal representatives of non-residents who have died; any non-residents who are partners in a partnership; non-resident trustees and non-resident companies or funds

The new tax is restricted to gains that relate to the period from 6 April 2015 to the date the property is sold, so it is unlikely to have major impact on property sales made early in 2015/16.

However, the disposal of the property must be reported to HMRC within 30 days of conveyance of the property by the non-resident seller, regardless of whether there is a capital gain or loss. Once the disposal has been reported, HMRC will send the seller an email with a payment reference and details on how to pay.

So for example a residential property sold by a non-resident on 1 May 2015 will need to be reported to HMRC by 31 May 2015.

Whether the seller is registered with HMRC for UK tax or not, they must report each property they dispose of after 5 April 2015 separately to HMRC using HMRC’s online form.

Where the seller is not registered with HMRC for UK tax, any charge must be paid with 30 days of the conveyance date. This payment can only be made once the conveyance has been reported to HMRC and they have replied with a payment reference number. There are penalties for failing to report the property disposal on time, and for failing to pay any tax due on time.

Graham advises “These new rules impose a very tight window for non-residents to report UK residential property disposals. With the possible penalties for failing to report and/or pay on time, non-residents and the solicitors dealing with their conveyance need to be mindful of yet another reporting burden to HMRC “.

This was posted in Bdaily's Members' News section by Robson Laidler LLP .