Capital Gains Tax

[Matt2008]

Can anyone help with an issue I have in relation to capital gains tax. My parents bought a flat and lived in it as their principal residence for some time (I think about 2 years). At that time they had another flat in the country which they went to at weekends. The utility bills are in my father's name but council tax was in my name with (for some of the period I think) a single person's discount. When we sold the property we claimed the PPR. We have now received notice of a check. Can we still establish the PPR for my parents by reference to the utility bills, or do you think they will see the council tax issue as conclusive? Will we be fined if we offer to pay the tax now?

Any help would be greatly appreciated

[mullet]

Assuming that your parents did not nominate one property or the other as their main residence within the time limit (2 years from the date when more than one residence existed), then HMRC will determine residence on the basis of the facts. Council Tax evidence is relatively strong, as it is based on a declaration to a statutory body. The utility bills merely show that your father was liable, not that he lived there. HMRC will look for other evidence, such as from bank, building society, DVLA, TV licence, house insurance, car insurance, accountant/solicitor, electoral roll etc etc.

If you accept liability you may well face a monetary penalty. It depends on the amount of CGT involved and the behaviours underlying the omission.