CGT penalties and arrears over errors made some years ago

[tax]

I have recently been selected for a CGT audit by the revenue for years 02 to 08. I was gifted a piece of a farm from my parent in 1997.
In 2002 I disposed of this.
In 2003 I hired an accountant to calculate my CGT for the revenue so I could make a submission before NOV 03 deadline.
In order to calculate this, the accountant needed some information which he was to request from my solicitor who acted in the sale and also when the Gift took place to me in 1997.

The calculation was made and this was given to me along with accountants’ invoice. I paid his invoice and submitted my CGT return with payment of the amount calculated along with his calculation sheet in Sep 03.


From the recent audit by the revenue, they outlined that the amount paid was significantly lower than what it should have been.
And it looks like they are right.

The problems are as follows.

1. Property was not held for 6 years after being gifted it - Outcome of this is that I have to pay Tax that my parents would have had to pay if they sold it on the open market in 2002.

2. CGT is calculated Value on acquisition - Value at disposal x .2 - the Value he used for acquisition is not the right value , not sure where it came from, But end result is that tax paid is 3 times less than what it should have been.


The revenue are now looking for the correct amount + interest + Penalties, which from 2003 is going to ruin me.


My question is,

1. I paid E1050 for professional services in 2003 to calculate this as I was not an expert in this area, submission was based on this , Do I have any legal right to reclaim monies from this?

2. I no longer have the kind of money required to settle this now, only property I have Is our family home, which I remortgaged to refurbish two years ago, My borrowing power is limited to say the least due to various loans etc. What can I expect from the Revenue? should I hide the TV?

Any help or experience in this area would be greatly appreciated as I am close to cracking up at the thought of what lies ahead.

 

[Brendan Burgess]

Re: CGT Trouble - Please Help

Who dealt with the Revenue Audit on your behalf?

How do you know that what they have said is correct? It probably is,but are you using another professional advisor?

Have you spoken to the original advisor who gave you incorrect advice?

I would think that if they were negligent, that they would be liable for the interest and penalties.

If they had done their job correctly in the first place, you would have paid the right CGT or maybe you would have delayed the transaction to benefit from no CGT or CAT.

You will need legal advice on this.

Brendan

 

[tax]

Re: CGT Trouble - Please Help


I have a tax adviser handling the Audit at present; He has been given two weeks to submit calculations on the correct CGT Value and also parents CGT.

Current Adviser agrees Revenue have a strong case.

Yes, Original advisor knows he has made serious mistake but fails to see where , ( His error was with value at time of Gift, which my original solicitor would have had)

Yes I am seeking legal advice, the best I can hope for is that I can claim the interest & Penalties I am told. But this could take a long time, Revenue will be expecting payment in two weeks or, So I am Goosed.

When payment is not made, what can I expect, court - means test - Payment plan?.

I am fortunate to be still working in a secure enough job for now but I have a gut feeling this has to potential to be very nasty.

 

[johnny1234]

Re: CGT Trouble - Please Help

The original adviser must have some kind of professional indemnity insurancew for mistakes that were made ? You might be able to do a deal over a payment plan with the Revenue. They know the values of land around the country - they have valuers working within the Revenue offices.

 

[Bronte]

Re: CGT Trouble - Please Help

I'm not at all sure the original advice was incorrect if the value was wrong then that value would have been supplied by the OP, presumable from an estate agent valuation.

In any case if a genuine error was made rather than a deliberate error, revenue have the power to waive penalties and interest. I would be upfront and honest to revenue and I hope your current advisor has a good relationship with the person in revenue dealing with this.

You are correct in that this could be very nasty. There is no two ways about it, if you owe it plus the penalties and interest well yes it's very serious.

 

[Graham_07]

I was gifted a piece of a farm from my parent in 1997.
In 2002 I disposed of this.
In 2003 I hired an accountant to calculate my CGT for the revenue so I could make a submission before NOV 03 deadline.
In order to calculate this, the accountant needed some information which he was to request from my solicitor who acted in the sale and also when the Gift took place to me in 1997.

Property was not held for 6 years after being gifted it

( His error was with value at time of Gift, which my original solicitor would have had)

It would appear that farm relief was claimed whereby you qualified as a "farmer" under the 80% test and your father then qualified for no CGT on disposal and also you got the benefit of a substantial reduction ( some 90%) in the deemed value for CAT purposes. One proviso of the scheme is retention by the recipient for 6 years. When the disposal was being made in 2002 it was < 6 years.

When the accountant was consulted in 2003 was he clearly aware that this disposal was of land which had been acquired under farm relief? If so then he should have definitely picked up on the issue of the CGT payable being higher than would have been the case had you complied with the farm relief conditions. You may then have issue with him over the incorrect computation. Even if it was not specifically mentioned, the type of acquisition ( farm land from a parent ) and disposal in such a short time should make the accountant immediately suspicious that there may be an issue to be wary of re CGT and farm relief.

On the matter of the valuation. The accountant is not an expert in valuations and would have used the information provided from those expert in that area. If this was solely an issue of valuation provided being too low then I would fail to see the accountant being at fault.

It is a serious matter and regardless of any potential claim against the accountant, ( hoping that he was a qualified and insured practitioner) the taxpayer has primary responsibility. Hopefully your present adviser can come to a satisfactory deal with Revenue.