HM Revenue & Customs (HMRC) recouped a further £140m in Capital Gains Tax (CGT) in 2016 following a renewed crackdown on CGT avoidance, according to law firm, Collyer Bristow.
Fresh data supplied by HMRC indicates £55m of the additional CGT revenue was obtained from tax investigations into “wealthy individuals and mid-sized businesses”, while the additional £85m was retrieved from individual taxpayers and smaller firms.
Collyer Bristow has since warned taxpayers to double-check they have their CGT affairs in order in order to avoid “lengthy investigations and hefty penalties” given that HMRC continues to focus intently on the topic of CGT.
James Badcock, partner, Collyer Bristow, said: “The Revenue has kept the spotlight on CGT avoidance schemes, abuse and error over the last year.
“It has proved a fruitful area for enquiries and they are likely to continue in this vein.”
Mr Badcock believed that a raft of high-profile tax avoidance cases has placed even greater pressure on the tax authority to flush out CGT abuse.
A number of the CGT penalties relate to “deliberate or calculated underpayment”, while there are still many taxpayers that make “genuine mistakes” or “simply fail to declare or undervalue an asset which has been disposed of or transferred, thereby cutting CGT collected”.
“Determining where and how much capital gains tax should be paid can be complex,” added Badcock.
“Complications can often arise when family members are involved, for instance.
“Increasingly, we are seeing cases where parents transfer property to their children, usually as part of a lifetime gifting strategy to ultimately reduce exposure to Inheritance Tax.
“These transfers can give rise to a chargeable chain and where this goes unreported, the Revenue is likely to investigate.”
An HMRC spokesman said: “The vast majority of people pay the tax they owe. As these figures clearly show, those who try to get around the rules are always challenged by our specialist tax collectors, to ensure that they pay the correct amount of tax due.”