profits on refurbished houses..no cgt

[wolves]

i know someone who has renovated at least 4 houses over the years and sold them after about seven months of doing them up for a large profit and not been charged cgt once.he says he is small fry and there isnt much chance of being caught as it is a hobby and not his full time job.his he right...how do the inland revenue know if its not your job and you do houses up in your spare time?

[jpcentral]

1. If he is buying property to renovate and sell it is more likely to be income tax than CGT.

2. Many people evade tax in a variety of ways. A lot get away with it, a lot get caught. The difference between a builder doing a 'job on the side' and your friend is that your friend is leaving a clear paper trail of his transactions to be found by a tax inspector - every sale and purchase will be recorded in various departments (stamp duty, land registry etc) of HMCE.

I don't know what the probability of your friend being caught is, but it is higher than the average odd job man. The HMCE systems are getting better at analysing and combining data held on their various computers. It's not a chance I would like to take. The penalties can be very serious possibly including prison.

John Perry
Central Business Services
Loughborough
www.centralbusiness.co.uk

[Taxbar]

Can I endorse John Perry's comments.

The best favour you can do this friend is encourage him to go to an accountant and submit accounts and declare his profits to HMRC, before he is discovered and ends up paying it all away in interest,penalties and professional fees.

Daniel Feingold
STP
info@stratax.co.uk

[pallet]

You do not say if your friend was living in these houses while he was renovating them.Every one should know 20 years is a long time to hide from the taxman,because he has time, intrest and penaltis on his side.So I to would endorse the last 2 posts unless he lived in these properties

[King_Maker]

I too would agree with John Perry's excellent reply.

IMHO, there is no doubt greater computer integration will provide HMRC with more relevant data to commence Enquiries into SA Tax Returns (or the lack of them).