The Consequences of Late or Avoided Capital Gains Tax Payments: A Detailed Look at Fines and Penalties

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Capital Gains Tax (CGT) is an unavoidable reality for many individuals and businesses making a profit from the sale of assets. The UK’s tax system mandates prompt payment of CGT, and failure to do so can result in considerable penalties. This article seeks to provide a comprehensive look at the fines and penalties involved in late CGT payment or tax evasion.

Late Payment Penalties

If you’re selling a residential property in the UK and Capital Gains Tax is due, you now have just 60 days from the completion of the sale to report and pay the tax owed to HM Revenue & Customs (HMRC). If you fail to meet this 60-day deadline, HMRC can impose late filing penalties.

The current penalties for late filing are as follows:

– £100 initial penalty for missing the deadline.
– Daily penalties of £10 a day for up to 90 days (a maximum of £900) after the Return is three months late.
– Additional penalties of £300 or 5% of the tax due (whichever is higher) for Returns that are six and twelve months late.
These penalties are on top of the tax you owe, and interest will be charged on both the unpaid tax and the penalties from the date the tax is due.

If you are overdue, give us a call and we will calculate the penalty for you.

We can review your circumstances to see if there are any grounds to appeal the Penalty.

Penalties for Incorrect Returns

If you submit a return that’s inaccurate and results in you underpaying tax, HMRC can charge penalties. The level of penalty depends on why you underpaid:

– If you were careless or made a mistake despite taking reasonable care, the penalty can be between 0% to 30% of the extra tax due.
– If you deliberately understated your tax but didn’t make any attempt to hide it, the penalty can be between 20% to 70% of the extra tax due.
– If you deliberately understated your tax and tried to hide it, the penalty can be between 30% to 100% of the extra tax due.

In addition to these penalties, you’ll have to pay the tax you underpaid plus interest on the late payment.

Tax Evasion Penalties

Tax evasion – that is, knowingly failing to pay your taxes – is a serious crime and can lead to stringent penalties. If found guilty, penalties can range from significant fines (which can be up to 200% of the tax owed) to imprisonment.

Conclusion

It’s crucial to understand your responsibilities and the potential consequences when it comes to Capital Gains Tax. Failing to report and pay CGT in a timely and accurate manner can lead to significant financial penalties and even criminal prosecution in extreme cases.

To avoid penalties, always make sure your tax return is correct and submitted on time. And if you’re unsure about anything, give us a call. This ensures that you’re meeting your tax obligations and aren’t hit with any unexpected penalties.

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What our customers say

Celia Prause
2. April, 2024
Great experience - I knew who I was talking to and James and Jayne were at all times friendly, competent and supportive. Even the international element didn’t deter them. An excellent service.
Katia Leonova
28. March, 2024
It is worth a lot when you can get a professional advice over the phone. Tax Bees answered my question just in minutes, in a extremely friendly manner, and with no attempts to upsell. Highly recommend them as CGT professionals!
Barry Loughran
21. March, 2024
I can only endorse all the previously posted positive reviews about this business. Friendly people and yet extremely knowledgeable and professional regarding the subject matter. A pleasure to deal with and I can strongly recommend them for all your taxation matters.
Andy Bacon
5. March, 2024
Having sold a UK residential property I had owned for 18 years I was facing a potentially significant CGT liability. Although the HMRC calculator appeared pretty straightforward I decided to approach an expert and fortunately found James just in time. I found his willingness to provide no obligation up-front advice over the phone very welcome and decided to appoint Tax Bees for peace of mind with the added bonus that his very reasonable fee might be saved when he got into the detail of my case. I certainly pays to spend some time putting together all the facts; as a result it proved very fruitful to invest in James when he significantly reduced my expected liability by many thousands compared to the HMRC online calculator. Lesson learnt - its never as simple as it first appears and not all the rules are entirely transparent!
Adam Jenkins
21. February, 2024
Tax Bees were fantastic at quickly and calmly helping us with a family tax situation. James was a reassuring presence during a stressful time. I wouldn’t hesitate in recommending him.
CLIVE WALLIS
14. February, 2024
I asked Tax bees at short notice to help out with my CGT submission, i found the team to be very efficient and very approachable . The fee was fixed .. so no nasty surprises at the end, and i believe the tax saving and peace of mind knowing that a professional had been involved is very reassuring. Thanks to James and Jayne.
Sara Barron
2. February, 2024
Thanks so much for everything and for completing our return on time. You've been so easy to work with and have done an excellent job. I found Tax Bees online and was nervous about using a service without a personal recommendation. However, I would highly recommend Tax Bees to anyone looking for help with their Capital Gains Tax, particularly James Dean, who has been exceptionally helpful and efficient from the first email enquiry and has achieved a great outcome.
tracey hale
28. January, 2024
Fantastic service very efficient attention to detail Friendly and very knowledgeable
Kate Jones
24. January, 2024
I popped into Tax Bees on the off chance that I might be able to get some help with my Self Assessment Tax Return. I drive past the building everyday and often wondered whether they would be able to help advise me. James and Jayne were so friendly and welcoming and after a nice chat and a coffee they reassured me that they could help straight away - even during the month of January which is a very busy month for them. I would certainly recommend Tax Bee's if you have any Tax needs or concerns for your business or if like me you just need help and guidance on that dreaded self assessment. James also looked into my last four years of pension tax relief and managed to get me a rebate. Very happy customer. Thanks again James and Jayne!
Melanie Palmer
22. January, 2024
We recently hired Tax Bees for capital gains tax reporting and we're very happy that we did. James was very helpful, knowledgeable and efficient. Money well spent :)