Allow Landlords to evict tenants where there are 14 days rent arrears14:34 PM, 1st October 2020
About 4 weeks ago 99
The taxman has confirmed The Money Centre’s long-held suspicion that HMRC is chasing property investors suspected of ‘flipping’ homes following the scandal of MP expenses.
Following in the footsteps of our articles, the Daily Telegraph has revealed HMRC has a new computer system that compares stamp duty payments on property purchases with capital gains tax (CGT) returns – or the lack of a return.
Flipping is buying a property and then selling again for a profit after a short time and often involves avoiding tax by claiming the property was a main home.
The anti-avoidance system is triggered by the sale of a property by investors logged as owning more than one residential property.
HMRC is also tightening up private residence relief rules that exempt property owners from paying capital gains tax on the sale of their main home.
In the MP’s expense scandal, many politicians elected second residences as their main homes to avoid CGT.
Two recent tax tribunal hearings show that taxpayers will have to submit more evidence to prove they lived in a property and reveal how tax prosecutors put their cases together to disprove a property was a main home.
In Favell v HMRC, Favell bought a flat in 1999 and transferred ownership to his son in June 2003. Favell did not declare any gain on his tax return and argued none was due as he could claim private residence relief because he had lived in the flat for a short time in 2001 after splitting with his partner.
He later moved in with the partner and later married her.
His appeal was dismissed because the tribunal felt Favell had not produced any evidence like bills, bank statements or official correspondence to show that he had ever lived there.
In Metcalfe v HMRC, Metcalfe bought an off plan flat in York in October 2002, which was sold in March 2003.
Metcalfe claimed he lived in the flat but, in the opinion of the tribunal, could not provide enough evidence to prove that he took up residence or planned to live there long-term. The appeal was dismissed.
Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.
Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agentsLearn More