Is ignorance of the law for the Non-Resident Capital Gains Tax return a valid excuse for late filing of the return? Can reliance on an adviser be claimed?
This is a freeview 'At a glance' guide to Non-resident CGT return penalty appeals.
At a glance
Non-residents who sell UK residential property are required to submit a 60-day Capital Gains Tax Return. Initially, the rules were not well publicised, resulting in many non-residents failing to meet their filing obligations.
Judges in the First Tier Tribunal have been taking differing views on this matter.
What happened:
- The new rules were not well publicised.
- Many conveyancing lawyers seem to have been unaware of the changes, meaning many landlords were not made aware of the new reporting requirements; however, conveyancers are not tax experts.
The uncertainties:
- It is not easy to say whether the Non-Resident Capital Gains Tax (NRCGT) regime is so especially complex that it requires taxpayers to obtain expert advice and assistance: it rather depends on the individual taxpayer.
- If it is not complex, then why were so many conveyancing lawyers unaware of the new 30-day (60 days from 27 October 2021) filing deadline?
- Should taxpayers rely on a property lawyer/conveyancer for basic tax advice, after all, they do advise on Stamp Duty Land Tax?
- If the rules are not complex, then why would a taxpayer need to rely on an adviser?
- If the rules are not complex, then would a taxpayer not suppose that they simply report their gains under normal Self Assessment?
- Are the rules so complex that all non-residents should engage tax specialists?
| Case | Judge | Appeal allowed | Reasonable excuse claimed | Other factors | |
|
Ignorance of the law |
Reliance on adviser | Or, Special circumstances | |||
| Rachel McGreevy | Thomas | Yes | Claimed and accepted | No claimed | There were special circumstances because the gain was fully exempt under PRR and the taxpayer filed a self assessment return in which she expected to be able to declare the gain |
| Patsy-Anne Saunders | Connell | Yes | Claimed and accepted | She was in Self Assessment and any person making a capital loss would normally expect to report and pay any CGT under Self Assessment | |
| Robert Clive Welland | Mosedale | Penalty reduced | Claimed but not accepted | Not claimed: however solicitor did not mention it | Penalties for 3 Returns: taxpayer unable to learn from his mistakes so penalties were reduced |
| Mosedale | No | Claimed but not accepted | Not claimed: Solicitor did not mention it | ||
| Alan Jackson | Shepherd | Yes, in part | Claimed but not accepted | Not claimed | Penalties for 2 Returns: taxpayer unable to learn from his mistakes so penalties were reduced. Penalties were miscalculated by HMRC so reduced further |
| Raymond Hart | Brannan | Yes | Reliance on adviser | ||
| Steven Harrop | Scott | No | Not accepted as an excuse | ||
| Mei Chung Wong | Scott | No | Not accepted as an excuse | ||
| John Nugent | Scott | No | Not accepted as an excuse | ||
| Timothy Cobb & Caroline Wenn | Scott | No | Not accepted as an excuse | ||
| Eric Scowcroft | Thomas | Yes | Yes, accepted: not well publicised by HMRC | Yes: conveyancer/Solicitor did not mention it | |
| Thomas | Yes | Yes, not well publicised by HMRC |
Yes: conveyancer/Solicitor did not mention it. Agent Update 51 which HMRC had referred to was issued 5 months after the conveyancing date |
||
| Nigel Pitcock & Karen Pitcock | Scott | No | No, non residents should check the law | Conveyancer/Solicitor did not mention it | |
| Lauren Murdock | Brown | No | No, non residents should check the law | Para 17 cap apparently not considered | |
| Ann Rowan-Smith | Beare | Yes | Claimed and accepted: | agreed a genuine error, thought gains reported under normal SA rules | |
| Barry Gilbert | Hellier | No | Claimed not accepted as no evidence of trying to find out the law: non residents should check the law | ||
Useful guides on this topic
How to Appeal a Tax Penalty
What are the steps in making an appeal? What should your appeal cover? What does recent case law say on this topic?
Penalties: Late filingLate returns can be subject to a mix of fixed and tax geared penalties. What penalties apply for late filing? Which penalty will apply and when?
Grounds for Appeal: Reasonable Excuse
What is considered to be a 'reasonable excuse' when a taxpayer makes an appeal against a tax compliance failure?
Non-Resident CGT: UK residential propertyCapital Gains Tax, non-residents and UK property.
Non-Resident Tax ToolkitThis toolkit covers the key UK tax issues for non-UK resident individuals holding UK assets and property and working in the UK.
Non-Resident Landlords SchemeWhat is the Non-Resident Landlord scheme? How does it work? Who does it apply to?
External links
All the cases above have links through the individual write up.