If you are a shareholder in a company you have little involvement in, you might not realise a share disposal can trigger Capital Gains Tax (CGT).<\/p>\n
<\/p>\n
Shares might have been put in your name decades ago by a parent or a partner, but you may have had little involvement in the business since. It is likely tax wasn\u2019t ever mentioned.<\/p>\n
You\u2019ve sold your shares and the money has reached your account \u2013 what needs to be done now to avoid HMRC \u2018failure to notify\u2019 penalties?<\/p>\n
If you are already registered for Self Assessment, you typically need to report a share disposal using the CGT pages of the tax return.<\/p>\n
For those who do not normally file a tax return, there are two options available.<\/p>\n
The first is HMRC\u2019s \u2018real time\u2019 transaction reporting service, which can be used to report gains originating in the current or previous tax year.<\/p>\n
If you decide not to use the real time service, you\u2019ll be required to register for a Self Assessment tax return to disclose the share disposal.<\/p>\n
As you might not have submitted a tax return in the past, you will need to contact HMRC by 5 October following the end of the tax year you have tax liability to pay.<\/p>\n
The gain will then need to be reported on the return by 31 January following the year of assessment.<\/p>\n
It is worth considering that a gain from several years ago doesn\u2019t automatically disappear from HMRC\u2019s radar.<\/p>\n
HMRC might only have four years to raise an assessment, but this can be extended if a taxpayer has failed to notify them of a tax liability.<\/p>\n
Failing to notify HMRC of a tax liability can result in a penalty, which can differ based on how your behaviour is viewed and whether you proactively disclosed your mistake.<\/p>\n
HMRC categorises behaviour as either deliberate or non-deliberate. Where disclosures are made, they are either prompted or unprompted.<\/p>\n
For example, if you forgot to notify HMRC about a share disposal, but you realised quickly and disclosed it yourself, this might be classed as a \u2018non-deliberate unprompted disclosure.\u2019<\/p>\n
Penalties for non-deliberate behaviour can range from zero to 30 per cent of the \u2018potential lost revenue\u2019 (PLR)<\/a>, which is the amount of tax that HMRC has lost from a failure to notify.<\/p>\n A penalty can be reduced to nil if you have a reasonable excuse for failing to notify.<\/p>\n However, HMRC often treats the defence of \u2018I didn\u2019t know\u2019 as a poor argument, so your actions when you found out often hold the most weight.<\/p>\n While non-deliberate behaviour typically yields the lowest penalty, unprompted disclosures to HMRC can help minimise penalties.<\/p>\n This is because prompted disclosures more than 12 months late cannot fall below 20 per cent PLR, even if they are non-deliberate.<\/p>\n Where behaviour is deemed to be deliberate, it is categorised as concealed or not concealed.<\/p>\n You might have intentionally not told HMRC about a tax liability, but did you take active steps to conceal your behaviour?<\/p>\n While the maximum penalty for non-concealed deliberate behaviour is up to 70 per cent<\/a> of PLR, it can rise to 100 per cent<\/a> if HMRC believes it to be actively concealed.<\/p>\n Reaching out to an accountant can help you confirm CGT liabilities and calculate how much tax is payable to HMRC.<\/p>\n An accountant can help you determine the correct tax to be paid and ensure it is reported within key deadlines, mitigating the risk of failure to notify penalties.<\/p>\n Where a tax liability hasn\u2019t been reported, tax specialists can manage correspondence with HMRC to provide disclosure of mistakes and defend penalty positions.<\/p>\n Worried about an unreported gain? Contact one of our accountants for guidance. \u00a0<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" If you are a shareholder in a company you have little involvement in, you might not realise a share disposal can trigger Capital Gains Tax (CGT).<\/p>\n","protected":false},"author":2,"featured_media":7188,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24,28,7],"tags":[],"_links":{"self":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/7185"}],"collection":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=7185"}],"version-history":[{"count":1,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/7185\/revisions"}],"predecessor-version":[{"id":7186,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/7185\/revisions\/7186"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media\/7188"}],"wp:attachment":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=7185"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=7185"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=7185"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Minimising non-deliberate penalties<\/strong><\/h3>\n
Deliberate, or deliberate and concealed?<\/strong><\/h3>\n
Seeking help from a financial specialist<\/strong><\/h3>\n