# Key Post: Will I be caught if I don't make a CGT return?



## Marion (29 Nov 2001)

*This was originally posted by a Mr Lawlor*


I am considering selling some shares which I have held for the past six years and have made a profit on. According to my advisor I would have a CGT liability of about £1,500 on this sale. What I want to know is how do the Revenue Commisssioners know that I held/sold these shares, does the company or stockbroker have to inform them of all purchases and sales?. A friend of mine invests in US shares and told me that he never pays CGT. If I don`t make a return and pay this tax what are the chances that I will be caught


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## CM (29 Nov 2001)

*Cgt*

[broken link removed] is a self assessment tax so the onus is on you to declare any taxable gain. A taxable gain is basically:

proceeds from sale of shares minus [broken link removed] cost of shares minus annual CGT allowance of £1000 less any previously incurred capital losses less any transaction costs

If this is greater than zero then it must be declared and the 20% CGT paid by the relevant deadlines. Note that the filing/payment dates in the booklet referenced above are for the "old" tax year starting on April 6th and may be different with the alignment of the tax and calendar years from 2002.

The Revenue will not be informed of your disposition of the shares by your broker or any other third party. If you don't declare it then there is always a chance (I can't estimate this) that they will find out further down the line - e.g. via an audit or when you next file a Form 12. In the latter case omitting any relevant details means making a false declaration and can be punishable by a fine and/or jail sentence.

If your friend was not in some way exempt from CGT but never declared/paid it then he is evading tax - a serious offence in the US as well as here.
*Neither I nor AAM would advise, condone or facilitate tax evasion.*


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## rainyday (29 Nov 2001)

*Re: CGT*

Hi Mr Lawlor

As a general rule, don't expect to get advice on AAM about how to break the law and evade taxes. It strikes me that your friend is playing a dangerous and immoral game. To me, I have a moral obligation to pay taxes due to me based on the laws of the land. The liklihood of 'getting caught' is irrelevant. If you do choose to avoid taxes due, then please also choose to never complain about health service, education, crime, the economy and all those other things we expect the Govt to manage.

On the other side of the coin, just think of all those off-shore account holders who went round in the eighties boasting to their buddies that they would never be caught. They are now facing punitive tax bills including penalties and interest as well as public disclosure/shaming. 

On the more practical issue, you should consider how you acquired your shares. If you got them through an employee purchase or grant scheme, it is very likely that your employer gave details of this scheme to Revenue each year. I know of at least one case where Revenue are chasing one individual for CGT tax due from a case like this.

If your CGT liability is £1,500, then your gain must have been somewhere around £8,500 - Do the decent thing and pay up to Revenue. You'll sleep a lot sounder as a result.

Regards - RainyDay


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## zag (29 Nov 2001)

*Re: CGT*

I know of one company who sent around a mail to all their share-option staff recently telling them to expect a call from the Revenue any day.

The company had been audited by the Revenue and they obviously noted that there was a share-option scheme.

As a result, all share-option scheme staff would have had capital gains on any disposal they had made.

Some people had paid up when they were supposed to, some said "we'll never be caught"

Except they were.

And hit for penalties too.

z


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## CM (29 Nov 2001)

*Share options*

The original query was not obviously about shares acquired through a share option scheme but if this is relevant then <!--EZCODE ITALIC START-->_ yes_<!--EZCODE ITALIC END--> - the company is very likely to inform the Revenue as described previously. In fact I think that they may even be obliged to. This was my experience when I worked for the Dublin office of a US owned company anyway.


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## L Lawlor (29 Nov 2001)

*CGT*

To answer Rainydays comment the shares were not bought through a share option scheme but personally.
I appreciate that tax evasion cannot be condoned on this site but as a PAYE worker I feel that a lot of self employed people are not paying their fair share and that this is the only way for me to make something without the Revenue knowing about it.I think a lot of people in my situation feel the same and that its not a case of feeling some moral obligation but of feeling that you might get caught.


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## rainyday (29 Nov 2001)

*Re: CGT*

Hi Mr Lawlor - Obviously, we fundamentally disagree. And just to clarify, it's not a case of me opposing tax evasion in this public forum, yet supporting tax evasion with a nudge & a wink if I were to be chatting with you in a pub. I oppose tax evasion in all forms at all times, and I've probably offended a view tax cheats by 'calling them out' in public places on this matter.

Regards - RainyDay


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## UDS (29 Nov 2001)

*Re: CGT*

We’ve spent many happy hours discussing the immorality of tax evasion on this Board already, so I won’t add to what I’ve said before on this.

Turning to the specific question of the likelihood of detection, we’ve discussed this too.  As to the question “how likely is [insert desired form of tax evasion here] to be detected?” the consensus answer is “don’t know”.  It depends on how good the Revenue systems for collecting and collating information are now, <!--EZCODE ITALIC START-->_ and on how good they will be in the future_<!--EZCODE ITALIC END-->.  All we can say on the latter point is that their systems (like everyone else’s) have come on in leaps and bounds over the last ten or fifteen years, and (like everyone else’s) they are expected to continue to do so.  So the most that can be said is that detection is probably more likely than it seems to be at present.


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## Spiderman (27 Sep 2002)

*Tax Evasion*

Based on the findings of the C&AG's report on the Incompetence of the Revenue Commissioners, it seems the answer to the original questions is "No, you probably won't be caught". Why? Because not only are Revenue incompetent, they are also lazy, which is far worse.

I recall back in the 80's my brother owed 250 quid in underpaid PAYE. The underpayment arose because of a clerical error by his employer. He tried to negotiate a deal with Revenue to pay the amount in instalments of 50 per month. The b@stards would have none of it. They wanted an immediate payment, so he had to borrow the money from his bank. Meanwhile, Revenue were writing off hundreds of thousands owed by at least one builder. Makes my blood boil.


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## Tommy (27 Sep 2002)

*Re: Tax Evasion*

<!--EZCODE QUOTE START--><blockquote>*Quote:*<hr> Based on the findings of the C&AG's report on the Incompetence of the Revenue Commissioners, it seems the answer to the original questions is "No, you probably won't be caught".<hr></blockquote><!--EZCODE QUOTE END-->

This would be a very stupid (and most likely, expensive) conclusion to make. Surely, the reason the C&AG report was able to highlight a few (inexcusable) stories of apparent Revenue incompetence was that this sort of thing is the exception rather than the norm.


Tommy
www.mcgibney.com


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## Spiderman (27 Sep 2002)

*Tax Evasion*

Well, Tommy, it seems you and I shall never agree on this point, but that's OK.

The C&AG audited only twenty cases, and found a high proportion were handled badly. (I shall have to read the detail in today's papers and come back to you with the actual percentages). To me, all the evidence contained in the aforementioned report and other sources indicate a low level of competence in Revenue.

Another point that bothers me is that many of these cases where tax evaders seem to have got off lightly involve builders and publicans. And many builders and publicans are active contributors to political parties, as we know. Is there a connection? Were Revenue told to "back off"? Who knows?


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## Couldntgetausername (27 Sep 2002)

*Tax Evasion*

Hey L. Lawlor and Spiderman,

Why not do away with tax altogether and let everyone fend for themselves. Make as much as you can and pay for everything you need (healt, education, transport)?

Wait a minute. Who's gonna pay for all the infrastructure first?

The government!

With what?

Tax money.

From whom?

Not me!

That's a great idea. Just because some (at least that we know of) big players are getting away with it doesn't mean we should all do our very best to evade tax. Things would start to fall apart very quickly if we do.

anymore by on this can be taken to the great debates I guess.

C.


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## UKIM2B (6 Jan 2003)

*Re: Tax Evasion*

As a professional advisor I would advise you to pay up now. However to answer your question the chances of you being detected or audited are very slim. Its possible that somebody you may have told of your gain will inform the Revenue as believe it or not this is quite common. But as a betting man I would give you 33/1 that you will get away with it.


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## Tommy (6 Jan 2003)

*Re: Tax Evasion*



> Its possible that somebody you may have told of your gain will inform the Revenue as believe it or not this is quite common.


Don't Revenue have access to the share registers of all plc's and also can demand full transaction records from stockbrokers?



> But as a betting man I would give you 33/1 that you will get away with it.



I'm sure every one of the tax-evading Ansbacher and bogus non-resident account holders thought the same. They were wrong.


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## UKIM2B (6 Jan 2003)

*Re: Tax Evasion*

Well Toomy I am 15 years ion the business and I have yet to see the Revenue trace such a small transaction or audit a PAYE person. I did advise him to pay up but I do think he has more of a chance winning a Trath na Ceist Scor All-Ireland than being caught.


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## Tommy (6 Jan 2003)

*Re: Tax Evasion*

*more of a chance winning a Trath na Ceist Scor All-Ireland*

Those things are ten-a-penny in some parts... :lol


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## hooper (15 Jan 2004)

*.*

L. Lawlor. Hmmm...


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