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Hi Its MamaTax Here!
You are right on the reporting dates and deadlines.
If you dont report your gains especially if there is tax due then there are potential consequences which can be upto 100% of tax due.
so I am assuming the company will have to pay corporation tax as a result of the sale? Will this automatically trigger HMRC to scrutinise the returns of the individual shareholders?
Ofcourse HMRC may not have direct information about your investments but there are corroborating information that HMRC can use and they can uncover this and this includes:
- Public share registers
-Companies House information
-Corporation tax filing - when the company files for tax returns ec
- the list goes on.
what if I declare by the reporting dates etc, but inform them I cannot afford the payment all at once - can I make staged payments, rather than not declaring it. Would HMRC look favourably on such a request?
The gain on your sale of shares is not a company gain unless the shares are held by another company you own. Hence the underlying company doesnt report the gain/loss on shares held by shareholder but may report change in shareholding and other financial disclosures thereof depending on the accounting standards.
If you cant afford the settlement then HMRC can agree with you a timeline on settlement. Where you not paid in cash for the disposals?
yes - paid in cash!
Then you must have a good reason then to justify that you cant afford the payment. Anyway have a look at this: http://www.hmrc.gov.uk/sa/not-pay-tax-bill.htm
How much is the tax due?
ok, so knowing the company accountant as I do, accounting standards will be high and I know form companies house documents that change of shreholders has been filed....are you are telling me that it is automated or is it down to the HMRC tax officers dilligence, to match up the change and investigate the ex shareholders?
All im saying is HMRC has various sources of information, therefore i would not recommend "not disclosing" the gain as the consequences can be quite high.
thanks for the link btw - useful
If you cant afford the payment and the amount is quite significant, its worth paying a tax expert to do the negotiation for you. You can easily google such people or use sites like HERE and HERE and post your requirements and experts call you back.
its not a huge amount - £2900, so not the sort of amount the revenue will be looking out for
Is this just a gain after taking into account the capital gain allowance of £10,900 or this is the tax payable?
this is the tax payable, after deducting 10600 and applying the remaining amount of basic rate band (34370) @18% and the remainder at 28%
You may also need to check if you qualify for other reliefs as enterprenuer relief as detailed here: https://www.gov.uk/entrepreneurs-relief
nah, need 5% shareholding for that. I only had 2%
ok - other reliefs are listed here: http://www.hmrc.gov.uk/cgt/shares/reliefs.htm
On conclusion i would still advise you to notify HMRC and perhaps negotiate to pay over a period. No amount is too small for HMRC to pursue!
I know I should disclose, I probably will, and no tax expert worth their salt will tell me "take a chance, don't disclose, there is a very good chance HMRC will not catch up with you"...guess I just needed to see it in print!
Ha ha ha - you wont find one like that. You can take your chances but....its risky!
Let me know if you have any further comments. If you are sorted, could you please rate the question before you go.
ok - I am good I think. Thanks for the advice.
Great. Good night.