Fixing a property return anomaly
Where a disposal of residential property results in a tax bill, it has to be reported to HMRC within 60 days on a property disposal return (PDR). However, some individuals missed this requirement and have been unable to do so retrospectively because a self-assessment return has been filed in the meantime. What’s going on and what should you do in this situation?
UK residents have to file a property disposal return (PDR) where a disposal of UK-sited residential property leads to a tax bill, i.e. where the gain is not covered by private residence relief etc. The PDR must be filed within 60 days of completion, and a payment on account of the tax must be made at the same time.
A problem has come to light where a number of taxpayers should have filed a PDR but did not do so. The gains were then reported on the self-assessment tax return. The problem is that an electronic PDR cannot be filed once a self-assessment return is filed. There is a misconception that filing a tax return displaces the requirement to file a PDR. In fact, this is only the case where a tax return is filed before the 60-day deadline for the PDR passes. In practice, this will only be possible for disposals where the date of exchange is close to the end of a tax year.
HMRC has now confirmed that any outstanding PDRs should be filed using a paper return. You should contact HMRC to request this, or your accountant/tax advisor can do this if they hold a valid 64/8 for you.
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