Does the penalty increase on late CGT payment?

[Misty23]

Hey there,

I am looking for help with the following scenario.

A friend of mine bought a new house 4 years ago. He was living with his wife in an apartment up to that (for at least 13 yrs) They did not move into the new house for 2 years after buying it. He finally sold the apartment about 8 months after that. He never paid CGT on the months over & above the 13yrs + 12 mths allowance. He is anxious about revenue becoming aware of this now & what the penalties will be for late payment of CGT.

It is the arrears & late penalties that he wants to find out about.
Do the penalties increase by % every year or are the late payment surcharges fixed at 5% or 10% regardless if he pays it today or in 5 years, lets say.

Cheers!

 

[Domo]

Don't forget interest on late payment - 0.0273% per day.
Surcharges are a % of the tax outstanding, and are fixed but 10% for more than 2 months late to a maximum of €63,485 (may have increased in budget).

It is the interest that keeps running......

 

[Newby]

The quicker your friend pays off the CGT (plus penalties and interest) the less interest they will owe the Revenue.

Have a tax advisor look over your friends situation as the facts are a little unclear from the information you provided. If the original apartment was owned (and lived in) by your friend for 13 years and they still owned (and lived in) the apartment for another 2 years then surely they stayed in the original apartment for 15 years. Once the moved out they would have sold within the 12 months of moving out (i.e. 8 months).

PPR relief is for your sole or main residence and on the basis that they were living in the original apartment for the 15 years (despite acquiring a new property) then the PPR relief should apply.

However, there may be tax implications (CGT & Stamp) for the new property purchased. Especially if it was rented out in the 2 years prior to moving in. Talk to a tax advisor.

 

[Satanta]

As Newby points out, the details are very hazy.

If they moved out of the apartment and sold it 8 months later, as seems to be the case, it was the PPR until they moved out and they managed to sell within the 12 month exemption period. If this is the case, no CGT due.

They will have additional headaches (possibly, depending on what actions they took during the whole process) such as claiming TRS relief on the "new house" when it wasn't a PPR, possible CGT (and SD?) implications on the "new house" depending on what happened in the two year period, etc.

I'd certainly echo the suggestion that they get a tax expert to review the situation. There are too many elements to it to get/give meaningfull advice without the exact details. I'd suggest not getting overly concerned about the potential interest rate until they figure out if they actually do have a liability (they may already be 100% certain they do, but it's not clear from the details given in the OP).