Late NRCGT returns – HMRC will not charge daily penalties

ICAEW has received clarification from HMRC on its approach to charging penalties for failure to submit Non-Resident Capital Gains Tax (NRCGT) returns. Specifically, it is using its discretion not to charge daily penalties.


The reporting requirements for NRCGT returns are explained in a Tax Faculty news item Non-resident capital gains tax returns – update. Based on a discussion on our tax forum the reporting requirement is catching people out.


The NRCGT return has to be filed within 30 days and if the individual is not in self assessment (SA), any tax due has to be paid at the same time. This means that a husband and wife (for example) may have different payment dates. The problem is that many people – including conveyancing solicitors – are unaware of the filing requirement, and as many sales result in no tax payable, it would not occur to individuals that a tax return was required. Those individuals who are in SA will get ‘caught’ and charged a penalty when they report the sale in their SA return; and those not in SA will not be caught if they do not tell HMRC about the sale, particularly if there is no tax to pay.


The clarification from HMRC states:


“The penalties for the late filing of an NRCGT return are in line with late filing penalties for other types of return; the amount of penalty applicable depends on the degree to which the return is late:


  • there is an initial penalty of £100 in all cases;
  • plus a further penalty of 5% of the tax due or £300 if greater for returns over six months late;
  • plus a further penalty of 5% of the tax due or £300 if greater for returns over 12 months late.


“Additionally, HMRC has discretion to charge penalties of £10 per day for returns that are filed between three and six months late.


“These penalties can be appealed if there is a reasonable justification for the return being late.


“Following representations from a number of customers and agents HMRC has reviewed its position with regard to the £10 daily penalties. HMRC can confirm that it no longer issues these penalties for late NRCGT returns and past penalties will be withdrawn."


HMRC is currently considering late submission penalties more generally and ICAEW recently responded to the consultation on this subject. The clarification from HMRC does not change the statutory position.

  • On the one hand this is very welcome. The charging of daily penalties which are only notified months in arrears and with no hope of modifying taxpayer behaviour in order to stop them accruing is ludicrous. On the other hand it seems that where the solicitor and agent are ignorant of the requirements, and an otherwise compliant taxpayer puts a return in significantly late when preparing his annual tax return with our help, even if there is no tax due we'll still be left appealing £100 + £300 + £300 penalties, just without the added insult of £900 worth of daily penalties thrown in.

    Is it too cynical to wonder if HMRC imagine that we'll appeal against £1,600 penalties with no tax, but might just tell clients to pay £700 penalties?