To ask Her Majesty's Government whether they will ensure, by amending the Finance Bill or in another way, that no taxpayer is entitled to claim the private residence relief (main house) exemption from capital gains tax on any property on which exemption from council tax or a second home discount is in force on the date of disposal. [HL3581]
Tax policy changes are considered through the Budget process in the usual way. The Government consider a range of factors when formulating tax policy and keep all aspects of the tax system under review.
To ask Her Majesty's Government how many people are employed on a full-time basis to investigate tax fraud associated with claiming private residence relief (main house) exemption from capital gains tax; in how many cases in the past three years for which information is available have claims for private residence relief (main house) exemption from capital gains tax been (a) turned down, and (b) accepted; and what checks are in place to ensure that private residence relief (main home) exemption from capital gains tax is only granted on qualifying property. [HL3583]
HM Revenue and Customs' (HMRC) compliance staff work across a number of taxes. The full-time equivalent of the time spent by compliance staff on private residence relief as part of their wider work could only be established at disproportionate cost.
Private residence relief is an automatic entitlement where the conditions are satisfied; no claim is necessary. Taxpayers are required to tell HMRC about chargeable gains if private residence relief is only due in respect of part of the gain. All such cases would be risk assessed against information held by HMRC and inquiries made where it appears that material amounts of tax are at risk.
HMRC also carries out a large number of checks into property disposals where the disposal has not been notified to HMRC but available information indicates that the taxpayer never resided in the property. In a substantial proportion of these cases the issue is whether private residence relief is due.