Capital Gains Tax Dispute Solicitors — Valuations, PPR Relief, BADR, and SDLT Disputes

HMRC Shares Valuation (for unlisted shares and employment-related securities) and the Valuation Office Agency (for land and buildings) may dispute the market value used in a CGT computation. The starting point is to commission an independent expert valuation from a specialist valuer (RICS-qualified surveyor for property; a forensic accountant or shares valuer for unlisted shares). The expert valuation is submitted to HMRC as a formal challenge to its own figure. If HMRC and the taxpayer cannot agree, the dispute is referred to the Tax Tribunal, which determines the correct market value. The Lands Chamber of the Upper Tribunal deals with complex land valuation disputes. A solicitor manages the expert valuation process and the legal challenge.

PPR relief (TCGA 1992 s.222) exempts the gain on disposal of a dwelling house that has been the taxpayer's only or main residence throughout the period of ownership, subject to the 9-month final period exemption (from April 2020; previously 18 months). HMRC challenges PPR relief where: the property was not in fact the taxpayer's only or main residence (HMRC requires evidence of genuine occupation — council tax, electoral roll, utilities in the taxpayer's name at the property); the final period exemption is disputed; lettings relief is claimed after April 2020 (now restricted to periods of shared occupancy); or a PPR election was not made within 2 years of the relevant change of circumstances. A solicitor prepares the factual evidence of occupation and challenges HMRC's refusal.

HMRC may refuse BADR on the grounds that the qualifying conditions were not met. Common HMRC challenges include: the 5% ordinary share capital or voting rights threshold was not satisfied (particularly following share restructurings, option exercises, or the issue of new shares); the individual was not an officer or employee throughout the 2-year qualifying period; the company was not a trading company or holding company of a trading group (too much investment activity); or the disposal did not qualify as a "material disposal of business assets" under TCGA 1992 s.169I. A solicitor analyses the qualifying conditions, challenges HMRC's specific grounds of refusal, and represents the taxpayer at the First-tier Tribunal where agreement cannot be reached.

HMRC can amend an SDLT return within 9 months of the date the return was filed. Thereafter, HMRC can only raise a discovery assessment: within 4 years of the filing date (where the return was filed and no discovery was possible from the information on the return); within 20 years where the non-compliance was deliberate. An SDLT assessment or amendment must be appealed within 30 days. A solicitor analyses whether HMRC has raised the assessment in time, whether the correct SDLT rate was applied, and whether the relevant relief (MDR, first-time buyer, group relief) was properly claimed — and challenges HMRC's decision through statutory review and First-tier Tribunal.

The time limits for HMRC discovery assessments for CGT (TMA 1970 s.34/36) are: 4 years from the end of the tax year for non-deliberate underpayment; 6 years for careless conduct; and 20 years for deliberate conduct or offshore non-compliance. Where a self-assessment return was filed, HMRC must also satisfy the discovery conditions in TMA 1970 s.29(5) — that the officer could not have been expected to be aware of the loss of tax from the information available at the time the enquiry window closed. A solicitor advises on whether the time limits and discovery conditions are satisfied, and challenges HMRC's assessment where they are not.