HMRC wins appeal over CGT tax discrepancy

The situation involving John and Janet Beesley’s tax affairs unfolded due to a series of significant errors made by their accountant. (John and Janet Beesley v HMRC [2023] TC08871)

The Beesleys submitted their self assessment returns for the year 2015/16 in January 2017. Neither included a capital gain despite having sold a property on 28 October 2015.

The accountant’s failure to grasp fundamental principles of capital gains tax led to incorrect reporting on the Beesleys’ self-assessment returns for the 2015/16 tax year. Despite selling a property in 2015, no capital gains were declared. HMRC subsequently contacted the Beesleys, prompting their accountant to provide a computation of the capital gains tax in 2018, which was riddled with errors and questionable deductions.

Upon review by HMRC, it became evident that their accountant had made substantial mistakes, including applying an incorrect tax rate and deducting inappropriate expenses. This led to HMRC issuing hefty tax assessments and penalties against the Beesleys.

Error after error

The accountant’s errors extended to misinterpreting tax legislation, such as deducting mortgage redemption amounts and personal guarantee payments incorrectly. Despite HMRC’s attempts to clarify the correct procedures, the accountant failed to rectify the situation promptly.

What many do not know is that the Beesley’s initial quote from a reputable accountant did not meet their expectation for cost and they sought out a cheaper alternative. Ultimately, the Beesleys were left to navigate a convoluted process of correspondence and appeals with HMRC, exacerbated by their accountant’s incompetence. It is a shame – although perhaps not that surprising – that the accountant in question was not named, as the level of incompetence shown is disturbing.

HMRC had the appeal dismissed on the basis that their behaviour was careless and there was no reasonable excuse. The case serves as a cautionary tale highlighting the importance of engaging accounting professionals who understand your tax obligations.

Seek Professional Advice

Moorgate Accountancy are ready to help you navigate the complicated world of tax legislation. The current rules around CGT are complex to say the least and the Spring Budget has only added to the confusion, with multiple rates depending on the circumstances of the taxpayer and the attributes of the gain.

Our team of tax experts are highly qualified with a wealth of experience. We offer not only competence but a straightforward approach which is easy to understand. Contact a member of our tax team who will be pleased to book you a free 30-minute consultation to discuss any tax queries you may have.

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