Transaction tax

HMRC provides tax advice too late

In the spirit of helping taxpayers comply with their tax obligations, HM Revenue & Customs publishes large amounts of advice online.

These tips are intended to help taxpayers file and pay their taxes on time and avoid penalties. There is only one problem: the timing.

The arrival of HMRC advice does not always coincide with when it is needed, particularly if you have a detailed question or a complex problem.

Although HMRC guidelines are not tax law, they explain HMRC’s view of the law that underpins our tax system and are used by HMRC staff, professional advisers and taxpayers. Accordingly, guidance is provided at varying levels of complexity.

The most basic advice is that available on gov.uk. As the central online source of information about government services, gov.uk’s advice is aimed at the general public and focuses on what you need to do, when you need to do it and how to do it.

Then there are the HMRC Handbooks – these are more detailed technical guidance which are written for HMRC staff, but also widely used by advisers to better understand how HMRC will interpret and apply new legislation in more complex cases. .

When new tax rules come into effect, basic advice is usually available quickly on gov.uk, but that more detailed advice available in handbooks can take months or even years to arrive.

During this time, HMRC will receive several queries, often on similar scenarios, as professional bodies, advisers and even individual taxpayers all try to clarify specific situations.

Trusts and CGT

The problems caused by late advice are illustrated by two recent rule changes. From April 6, 2020, UK residents selling residential property that have capital gains tax to pay must calculate, report and pay that tax within an initial period of 30, and now 60 days of completing the transaction .

These rules primarily apply to landlords and owners of second homes, but may apply to anyone who has not lived in a property throughout their ownership.

While deadlines for filing and paying taxpayers are tight, by contrast, HMRC has given itself 20 months before the first detailed guidelines on the process are issued in December 2021.

With no effective guidance on how to use the system and how to deal with common problems for over a year, we found ourselves writing our own guide to help our members.

This is not the first time that we have had to write our own guidelines to help advisers deal with the new rules. A similar situation occurred with the Trust Registration Service.

First introduced in July 2017, the TRS is an EU anti-money laundering measure. Under the original rules, trustees of trusts that paid tax, including income tax or CGT, were required to register the existence of their trusts with HMRC using the TRS. However, HMRC’s detailed guidance on TRS only emerged in May 2021, almost four years later.