HMRC are vigilant regarding all property transactions, and over
time its breadth of property information has grown. HMRC now keeps
accurate records of taxpayers who:
- own multiple properties;
- have sold a property in the tax year;
- or have not declared any gains on the sale of a property.
HMRC enquires extend to the application of the Principal
Residence Relief (PRR). PRR applies where an individual sells their
home and provides an exemption from capital gains tax (CGT).
Taxpayers should keep accurate records to prove PRR applies, or
risk being called (along with their advisers) to provide evidence
that no capital gains tax is due. It is advised that a 'white
space note' should be used to notify HMRC where PRR applies,
and this should provide some protection against unexpected future
penalties should HMRC disagree about the application of PRR.
