HMRC Miscalculating CGT on Non Residents' Property Sales

 

Where a taxable gain arises on a UK residential property disposal the taxpayer must report this gain through the UK property account service and pay the tax due within 60 days of the completion date. It is reasonable to assume that the HMRC online system would correctly calculate the gain based on the figures reported.

For UK residents the UK property account does appear to calculate the gain correctly based on the figures supplied.

However, where the taxpayer is not a UK resident, HMRC has confirmed on the Agents Forum that the service does not calculate the gain correctly, and the system may even tell the taxpayer there is nothing to pay.

Spiffing, another HMRC IT design fail!

Tax does have to be taxing.

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HMRC Plays Monopoly In Telford

Insider Media Limited reports that HMRC has agreed to take 13 floors of office space in the largest commercial letting in Telford for more than a decade

"GVA and Bulleys Bradbury have completed deal which will see HMRC take 112,256 sq ft of space across One and Two Telford Plaza. Leases have been taken on terms of nine to ten years.

The acquired space will be used by HMRC to consolidate a number of existing offices.

GVA’s initial instruction was to negotiate terms for the acquisition of a single 12,000 sq ft floor in Two Telford Plaza. Additional instructions were then received for acquisition of further accommodation across One and Two Telford Plaza totalling 66,147 sq ft, with a third instruction for a further 34,056 sq ft.

Andrew Venables, GVA, said: "The quality of the space Telford Plaza offers HMRC is exceptional value for money.

"This is a significant letting for the Telford market both in terms of the profile of the occupier and the quantum of the space that has been transacted.

"This deal has developed from our initial instruction to acquire a single 12,053 sq ft floorplate in Plaza Two and working with the landlord’s agent, Bulleys Bradbury, we were able to ensure that Telford Plaza was able to accommodate the growing requirement for high quality, cost effective office space."

Richard Bradbury, Bulleys Bradbury, added: "This is an outstanding letting for the Telford market generally and for Telford Plaza specifically.

"The landlord is naturally very pleased to have an occupier of the calibre of HMRC on site and we have been working closely with GVA throughout this process.

"This letting, together with further recent lettings in the building, has resulted in both Plaza One and Two now being fully let and occupied, preserving a significant number of valuable jobs in the town."
Constituting two commercial buildings, Telford Plaza is located just off Junction Five of the M54 and close to Telford Central railway station.

GVA acted on behalf of the tenant, with Bulleys Bradbury acting for the landlord, Telford Plaza UK."

My question is this, and one that the article has not answered, why did HMRC's original 12,000 sq ft request morph into 112,000 sq ft?

Maybe HMRC are playing Monopoly?

Tax does have to be taxing.

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Joining The Dots of HMRC's Property Deals

Unsurprisingly, yesterday's article about HMRC's very expensive superhub in Cardiff has raised a few eyebrows and issues.

My thanks to a loyal reader for posting the following comment that highlights a few dots that need to be joined:

"Whoa there pilgrim, just a cotton picking minute, let's take a closer look at this afore ye spend all that "customer's" money!?

Who owns the Llanishen site? Thought Mapely did as per Wales On Line 13 Nov 2015 - The freehold interest in the current HMRC office site at Llanishen is owned by Mapeley Estates, following a private finance initiative agreement ...????

Surely that was why HMRC was paying for rent etc. on the site?

Then there is the matter of £20m (currently) for fitting out, so the lease is bare building? This is (currently) £5000/head just to fit out! WTF they having 22" plasma screens, gold plated loo's, FFS?! Piss off to IKEA, just a mile or 2 down the road and save yourself a few million!

Transport/parking infrastructure - all of a sudden 4.000 extra staff plus security, cleaners, deliveries etc. land upon the centre of Cardiff via train, bus, car, pedal, foot. Bloody trains have to queue now outside the station and Cardiff traffic is a nightmare for public and private transport.

Who is actually paying for this "range of benefits to people in Cardiff" ? Oh, that's all right then, it is only the end user that has to worry then, come back in 5 years time and see how much the real cost has reached!

Given the appalling track record of previous estate deals in this part of the public sector this needs a wee dig by an investigative journo' to establish VFM and whether basic business checks have been applied to such an amount of "customer expenditure".

Oh, yes, as these Muppets no longer FTF with their "customer" base, why the need for an expensive central location - vanity? Is there a common purpose associated with the development that remains hidden?

Answers on the back of a postage stamp please."

Oh, and don't forget (as per WalesOnline):

"The freehold interest in the current HMRC office site at Llanishen is owned by Mapeley Estates, following a private finance initiative agreement with the UK government. 

But that deal will expire around 2020. The land would then revert into UK government ownership."

2020 being the year that HMRC moves to its superhub.

There's irony for you!

Tax does have to be taxing.

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HMRC's Property Plans Are Shite - It's Official

The Public Accounts Committee has poured scorn on HMRC's "plans" to save more than £500m by condensing its sprawling office estate into just a handful of giant hubs.

PAC doesn't think that the 10-year scheme to reduce HMRC’s 170 offices to 13 regional bases in city centres, along with four specialist centres and a London headquarters will deliver the expected economies.

PAC also noted that closing down offices would damage local economies, with some offices being major employers in the areas.

The Telegraph quoted PAC:

"HMRC has yet to demonstrate it has a realistic and affordable plan to deliver such a radical change to its estate, and we do not believe that it needs to be based in expensive cities across the UK”.

In other words the plans, if they exist, are shite!

PAC, for good measure, also warned about the effects on staff:

“It already experiences too high a level of staff turnover with 5,000 to 6,000 staff leaving a year and it will take time to recruit and train staff in new regional centres.”

HMRC said that it will "consider" the report.

Snort!

Tax does have to be taxing.

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HMRC Moves To India

Place North West reports that HMRC has selected India Buildings as the preferred location for its new Liverpool home, leasing the majority of the office space within the 350,000 sq ft landmark property.

In Liverpool, HMRC currently occupies Graeme House, Regian House, Imperial Court and The Triad in Bootle.

The grade two-listed India Buildings was sold in January by Green Property to Shelborn Asset Management for £17m, and at the time was 80% vacant.

India Buildings dominates Liverpool’s traditional office district and occupies an entire block at Water Street and Brunswick Street in the heart of the commercial centre. The gross internal floor area is 500,000 sq ft and includes the Holt’s shopping arcade on the ground floor.

Quoted rent at India Buildings is £16.50/sq ft. However, the building would be extensively refurbished both internally and externally in advance of HMRC taking occupancy.

Worthington Owen is the agent for India, while JLL is advising the Government on its estate strategy.

Tax does have to be taxing.

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HMRC Scores Largest Cardiff Property Deal of The Year

As the commercial property bubble appears to have been pricked by Brexit, I see that HMRC in Cardiff has just secured the largest property deal of the year in Cardiff with Cooke & Arkwright.

HMRC has completed on 54,587 sq ft at Brunel House.

HMRC has an ongoing long term requirement for its Welsh regional hub, bringing new work to Wales and accommodating up to 3,800 full-time posts in the city centre by 2019.

Brunel House is managed by Mercer Real Estate Partners. Alex Hardwick, from Mercer, is quoted by Wales Online:

“We are delighted to have secured such a substantial letting to the building within such a short timeframe of taking over the building, and look forward to welcoming HMRC to Brunel House."

Meanwhile...

In Dramatic Twist, UK Property Fund Cuts Value Of Its Assets By 17%

Tax does have to be taxing.

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Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

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G4S Awarded HMRC Contract

G4S, the company that has been in and out of the headlines over the years, has been awarded a contract to provide facilities management services to HMRC's Commercial Directorate.

The three-year contract starts this month and is worth £4M (excluding capital and project works).

G4S will provide FM services such as helpdesk and CAFM (Computer Aided Facilities Management).

There is a possibility of a two-year extension to the contract. The agreement covers three regional tax offices – Trinity Bridge House in Salford, Elgin House in Edinburgh and Cotton House in Glasgow – collectively occupied by about 2,500 people, with 3,000 visitors a month.

It is anticipated that G4S will employ 33 members of staff across the three sites. The contract will mobilise in phases, with the largest property, Trinity Bridge House, beginning on 15 April 2014 and the other two likely to follow in January 2015.

G4S will provide a range of core and managed services including; cleaning, waste management, catering, reception, security and grounds maintenance as well as health and safety, fire safety, environmental management, energy and waste management through managed suppliers.

Source FMWorld

By happenstance Charlie Elphicke MP is quoted by the FT opining the CEO of G4S's remuneration package:

“People will rightly ask how a company that has let down taxpayers time and time again can justify raising the pay of its chief executive by nearly a quarter. It is wholly unacceptable and wrong.”

If the company lets down the taxpayers so often, why is it being used by the government?

Oh, and by the way, it remains under an ongoing investigation by the Serious Fraud Office.

Tax does have to be taxing.

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Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

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HMRC Goes Fishing

It seems that HMRC has gone on one of its little fishing trips again. This time it is trawling the waters inhabited by landlords.

Mike Down, of Baker Tilly, is quoted by the Association of Residential Letting Agents (ARLA) as describing the recent campaign by HMRC to crackdown on rogue landlords as "shocking" and "scarily aggressive".

Down claims to have seen a "stencilled" letter which had been sent to one landlord client. Down made clear that this landlord had been perfectly compliant when declaring his rental income. The information used to contact the landlord had been supplied by a local council.

The letter reportedly asked for a thorough breakdown of all the properties owned by the landlord, including addresses, periods let, the amounts of rent involved and the number of tenants at each property.

Down was quoted:

"Clearly it's good to see HMRC cracking down on tax cheats, but we do have real concerns over what appears to be the non-risk-based approach of this campaign.

What's even more shocking is that telephone staff at HMRC are openly admitting that the probing letters are being issued without the department having first checked whether the landlord is in fact fully declaring the rents on their annual tax returns.

Quite aside from the fact that questions asked of taxpayers who have completed returns under Self-Assessment must be made under the formal and time-sensitive enquiry framework, it seems that HMRC staff are unnecessarily wasting the time of law-abiding taxpayers, as well as their own valuable people resource.

Surely it's time HMRC were more careful with their precious resources and invested time in carefully checking third-party information before sending what might be viewed as scarily aggressive letters to those who are fully tax compliant?"

Have any loyal readers received such letters?

Please drop me a line if you have.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

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What is Solar Tax Investigation Insurance?

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To find out more, please use this link Solar Tax Investigation Insurance



Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

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Peterlee – Emerald Court, Bracken Hill Business Park

I have, on occasions, mentioned Mapeley (an offshore property company) and the rather lousy deal that HMRC made with Mapeley.

Here is a wee example of how HMRC, albeit inadvertently, have helped others make a nice little profit.

Source Drivers Jonas Deloitte

Client
Matrix Securities Ltd

Area of Advice
Disposal of a call centre

Vendor
Matrix Securities Ltd

Purchaser
Mapeley

Terms
Sold for £11.1m to show a net initial yield of 6.0%.

Date of Deal
June 2006

Our Role
We arranged the sale of a 61,000 sq ft call centre, let to the Inland Revenue, with a passing rent £717,000 pa.

The syndicate, put together by Matrix who funded the construction of the property on a speculative basis 7 years ago, were thrilled with the outcome - some £1m over expectations and provided them with a very healthy return."

I suppose though that an element of the profits made by all the parties involved, those who are onshore at least, are taken back by HMRC via tax.

Tax does have to be taxing.

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Click the link to read about: Tax Investigation for Dummies

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Bottom of Class

In August I asked:

"If offshore tax havens are so evil, in the eyes of the Treasury and HMRC, why are HMRC's buildings subject to a sale and leaseback deal with Mapeley PLC (a property company based offshore in Guernsey)?"

It would seem that was not the only question that I should have asked about HMRC's relationship with Mapeley.

In fact "Serious Cat", in the comments section of that article, was quick to point out at the time that there were other issues wrt HMRC choosing Mapeley:

"I think we all know exactly why Mapeley were chosen for this property management contract and, indeed, there are some parliamentary minutes floating around which detail this reason - they're cheap!

Of course, Mapeley had no experience in property management, but theirs was the cheaper bid by far."

And

"The following is an excerpt from the "Oral evidence taken before the Committee of Public Accounts on Wednesday 27 October 2004"

Q1 Chairman: Good afternoon. Welcome to the Committee of Public Accounts where today we are looking at PFI: the STEPS deal, and we are joined by witnesses from the Inland Revenue, HM Customs and Excise and a witness from Mapeley. Mr Varney is the executive chairman of the Inland Revenue/Customs and Excise. It is your first visit, I believe. You are very welcome. He is joined by Ms Helen Ghosh, director general, corporate services, and Ms Siobhán McHale, director of estates and, from Mapeley, Mr Jamie Hopkins who is the chief executive officer. Mr Varney, does it give the Inland Revenue any sense of shame that they are now known as a well known tax avoider?

Mr Varney: I do not think they are known as a well known tax avoider. I do recognise that in the agreement there is an unfortunate feature. As you know, the government changed the guidelines so for a forward procurement that would not arise.

Q2 Chairman: Why did you not specify in the bidding documents for this deal that these properties should be held onshore?

Mr Varney: With the benefit of hindsight, one can say it was a mistake.

Q3 Chairman: Will you please look at paragraph 2.24 which you will find on page 21? You will see there that it says: "The Board of the Inland Revenue only became aware of the tax arrangements late in the procurement" and the Customs and Excise were not told until after the deal had been signed. Why is that?

Ms Ghosh: I was not there. It was before my time, but—.

Q4 Chairman: We are not interested in whether you were there or not. You represent this Department and you will answer questions on it.

Later in the minutes...

Q92 Mr Steinberg: You have no proven record, have you, as a company in property management?

Mr Hopkins: Prior to this transaction, no.

Q93 Mr Steinberg: Why did you go to them? Purely financially?

Mr Varney: £500 million to reinforce—

Q94 Mr Steinberg: You were prepared to gamble the whole of the Inland Revenue estate on the basis of £500 million which they may at the end of the day cock up?

Mr Varney: The NAO Report makes very clear we followed all the lessons from DWP. We tried to look at how we minimised the risk in this contract. The public purse is better off to the extent of £500 million, plus it has competition and flexibility. That is not a gamble. That is a sensible decision.

Q95 Mr Steinberg: I would have been very suspicious when a company comes along and they can undercut everybody by half a billion pounds. Are you not suspicious at all about that? They do not have a record in property management and they can come along and undercut everybody by half a billion pounds and you think you are on a safe deal, do you?

Mr Varney: I think you do the due diligence which is described in the NAO Report but I do not see my job as trying to maximise the revenue of service providers.

The full text is available here and it makes very interesting reading.

Hopkins has jumped ship from Mapeley and gone to one of their rivals, while Varney pocketed a knighthood and left HMRC in 2006.

Basically, the whole thing was a massive cock-up from beginning to end. Mapeley have no property management experience and it shows. Tales of 3-month delays in receiving a replacement light-bulb are not uncommon and many members of staff have simply given up reporting issues because of the poor service.

That's the reality of the Mapeley contract."

However, it doesn't end there. The National Audit Office (NAO) have issued a report that gives HMRC a well deserved kicking for this contract.

HMRC had promised £1.2BN of savings in maintenance and other costs, as a result of signing with Mapeley. In reality the savings will be around £900M, possibly falling to £650M.

The NAO go on to state that there is now a "significant risk" that the contract will not deliver value for money over the rest of its life.

It seems that, according to the NAO, HMRC had no long-term plan regarding the sale and didn't even know that Mapeley was offshore!

The NAO is of the view that HMRC had not recognised the contract as a major strategic asset, and had not allocated the requisite commercial skills to managing it.

Well done!

Tax does have to be taxing.

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Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

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Question

If offshore tax havens are so evil, in the eyes of the Treasury and HMRC, why are HMRC's buildings subject to a sale and leaseback deal with Mapeley PLC (a property company based offshore in Guernsey)?

"In April 2001 we purchased the portfolios of the department of Inland Revenue, HM Customs & Excise and Valuation Office Agency (since merged into HM Revenue & Customs - HMRC). These portfolios totalled 147 freehold properties and 454 leasehold properties. Our agreement with HMRC includes 20 year sale and leaseback and the provision of comprehensive property and facilities management services to most of the HMRC estate.

As at 30 June 2008, the total value of this portfolio was £526.8 million.

Under this contract we own the freeholds and manage the leaseholds occupied by HMRC as principal (we take the risk of rising rents and we benefit from falling costs), provide a full facilities management and carry out construction fit-out works on behalf of HMRC to a pre-agreed price."

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Big Brother

There is something of a right old fracas brewing over the secret contract that gives government officials access to detailed records of 16 million houses and property sales. This contract is due to expire in March, and will be up for renewal.

The contract is between the government and Rightmove, the online property search firm, and it gives HMRC staff access to its records of transactions.

Needless to say these records contain details such as sale prices of properties, their internal features and any modifications that would enhance their value.

Why would HMRC be interested, or indeed need to know this this information?

Council tax!

The details gleaned by HMRC will be used by the government to increase council tax. This most hated and iniquitous tax is already being raised again this year by more than inflation. We can be certain that as the government becomes ever larger and more greedy, it will need to find further ways to fund its existence.

The contract between HMRC's Valuation Office Agency and Rightmove, states that Rightmove is bound by the Official Secrets Act and all its staff must sign a confidentiality agreement.

Rightmove keeps data on 16 million properties, and added 3.3 million records to its files in December.

Eric Pickles MP, the Tory shadow secretary of state for local government, said:

"The public will be alarmed that detailed information on 9 out of 10 house sales and rentals are secretly being passed from estate agents to tax spies without the public's knowledge or agreement. This is a shocking sign of the growing surveillance state under Gordon Brown."

The government claims that the contract was simply part of its efforts to keep records up to date.

They would say that wouldn't they?

The solution for the taxpayers of Britain is to boycott Rightmove. That will kill off this contract pdq.

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