First-Tier Tax Tribunal Decision on penalties for Non Resident CGT returns

Following a discussion on the ICAEW Tax Faculty forum, it appears that many non-resident taxpayers have been caught out by the requirement to file a Non Resident CGT (NRCGT) return within 30 days of the completion of a disposal of UK residential property. Consequently they have incurred penalties.

There has been insufficient communication from HMRC about this requirement and in particular that

  • a return is required where no tax is due, and
  • reporting the disposal on a self assessment tax return is not sufficient.

HMRC is exercising its discretion and is not charging daily penalties, however, the £100 fine for failing to file by the due date and the £300 penalties for failing to file by 6 and 12 months later, are still being charged.

It is not clear whether or not those people who have already paid the daily penalties will be able to request a refund, possibly on the grounds of treating all taxpayers equally.

The First Tier Tax Tribunal has now allowed an appeal against NRCGT penalties in the case Rachel McGreevy and HMRC TC/2017/04089.

In the decision, dated 12 September 2017, the judge referred to the discussion on the ICAEW forum and stated:

“The arguments advanced by HMRC about knowledge of the law are little short of preposterous. To say that information about NRCGT returns is “well within the public domain”, as if the public domain had boundaries where one could tell whether something was just in it or well within it or completely within it, is also claptrap.

Even assuming that the appellant started to market her property or exchanged contracts after 5 April 2015, it is also preposterous to expect that a document on HMRC’s website which is not easy to find for a tax judge makes invalid all possible excuses about not knowing of the NRCGT return deadlines.

There is a serious deficiency exhibited here in common sense, proportion and an ability to consider the position of what HMRC calls its customers.

I do not think that it is unreasonable for a person who knows that they have been making annual SA returns, that those returns require a return of CGT liability, (even if they do not know that the return does not even require a gain exempt because of private residence relief to be returned) and whose own gain is exempt (but is one that they obviously tried to report in their on time return for 2015-16) not to realise that they must file a NRCGT return showing no tax to pay within 30 days of completion, or otherwise to face penalties of £1,600. Why would they?”

We are not aware of how HMRC intends to respond to this decision, but the case will be of interest to anyone appealing against NRCGT penalties.

  • As an accountant living overseas if I was to sell my home in the UK I don't think filing a special HMRC form NRCGT would be a norm on my mind.I would not be immmersed in UK activities and as I always file my SA I would have thought this is enough. If any change is needed a extra section on the SA CGT would suffice unless HMRC are deliberately discriminating against non-residents.