NRCGT penalty

In July 2016 I found out that my client (who lives in Indonesia) had sold a UK buy to let property in October 2015.  I immediately sent in a NRCGT return online.  He now has a penalty notice for £1,300 for not sending in the return within 30 days of the conveyance.  The gain returned is £204.  The fine seems to me to be disproportionate and unjust because he, not unreasonably, expected to return the details of the gain on his 2016 tax return in the normal way.  With hindsight I can see that I should have flagged this up just because he is a non resident landlord in case he happened to want to sell a property.  I am looking for reasonable excuses to appeal this and pointed out that knowing he is non resident his solicitor should have warned him about the 30 days.  The solicitor is well respected locally and has replied candidly that he knew nothing about the 30 day time limit and to be fair neither did I at the start of the 2015-16 tax year.  I know that not knowing the rules is no excuse but this seems so unfair.  If professionals don’t know about new online reporting rules how can the tax payer in Indonesia (where communications are not the best) be expected to know?  Is there any way to challenge this and is anyone else in the same boat?

  • Anonymous
    Anonymous

    In reply to Anonymous:

    Yes got the letter about dropping daily penalties, now my accounted is still disputing the 1400 pound between myself and wife. The thing is that when we found out about the Nrcgt form and in our case it was just the form to fill out and send them no tax to pay we put our hands up to it so called doing the right thing they don't encourage anyone to be honest sorry about the rant fingers crossed will keep all informed on the out come.
  • Anonymous
    Anonymous
    There are lots of people in the same boat. I have appealed against a penalty of a £1600 fine for selling a property in July 2015
  • Anonymous
    Anonymous

    In reply to Anonymous:

    We did the same with regard to 3 house sales. We were aware that there were going to be changes and spoke to HMRC in March 2014. We were told the NRCGT would form part of our SA returns. We foolishly believed them and were served fines totalling £3960. Our lawyer handling the sales knew nothing of this and our accountant who had been on a course had been told a separate form would be raised, triggered by lawyer at time of sale, and it would form part of your SA return. HMRC now say it is our fault as we should have kept checking their website and our accountant should have been aware of 'Agent Update' 51. This update is dated 15 Nov 2015. 4 months after the sale. As you say. They make it so honesty doesn't pay. I don't see any mechanism to track house sales if you don't fill the form in. They are in chaos. We will keep fighting.
  • Anonymous
    Anonymous

    In reply to Anonymous:

    I've copied below the astonishing data you obtained from HMRC so it reaches as wide an audience as possible. Perhaps UB40 could re-record their iconic hit with the following updated lyrics:

    I am one of nearly four in ten who is going to receive an NRCGT return late filing penalty.
    If I pay the £1,600 fine, my kids will not have much for tea.
    This filing system was devised by George Osborne who no longer has much time to be an MP.
    This Government is robbing me; Theresa, do you agree?

    We have asked freedom of information questions and we're told as of 31 Jan 2017.
    1. 20,264 NRCGT returns have been filed
    2. 1583 show tax due of £7,688,004
    3. 7356 were late : our comment that is 36%!!
    4. Late filing penalty issued for 4,022 resulting in penalties of £3,338,910. Our comment : that is 30% of the revenue from NRCGT is penalties! We are asking what about the 45% who were late and didn't receive penalties.
    Surely this is a clear indication that HMRC failed to inform those who were affected by the tax and reporting mechanism; HMRC send out reminders for self-assessment returns (we've just received ours). Why couldn't they do that to non residents regarding NRCGT.
  • In reply to Anonymous:

    The information in the above post was posted by my wife on Taxationweb.co.uk and was from HMRC in response to questions asked under the freedom of information act. We have more questions.  Why are some fines being cancelled and others not when the circumstances are the same?

    We have been in communication with our MP throughout this and he is very interested. On our behalf he wrote to Jon Thompson ( HMRC CEO ) who responded with party line guff! He stated that in June 2015 Twitter announcements were made once a week for 4 weeks to alert people to this change. We have asked 'how many people who would be liable for this tax, follow HMRC on twitter? As yet no response.

    We are given 30 days from the date of the letter to reply. We have repeatedly pointed out that mail is taking 26 days to reach us.

    I have run my situation past a UK ( LLB ) qualified prosecution lawyer working here in NZ. Part of his job is dealing with tax fraud here in NZ. He asks, what is the purpose of the fines as none of our actions can be deemed to be repetitive behaviour, premeditated or that we did anything to avoid paying tax? ( reasons to apply fines ). He is astounded at the decision to charge these penalties in the first place and summed up the situation as ''ridiculous '' and HMRC were being unreasonable.  An embarrassment to the UK.

    The reply to my appeal stated that details  of the new requirements were in 'Agent Update 51' and I or my agent should have been aware of this. She did not date the document and I wonder if she is aware that this document was published on 15 Nov 2015, 4 months after the completion of my sale.

    I have no intention of paying as to do so could be seen as an admission of guilt. I have done nothing wrong.

    Keep the pressure on them. Write to your MP. Maybe we should consider a class action.

    Sorry for the anonymous,  I jumped in without registering. My name is Bob and my wife is on taxationweb.co.uk

    It is recognised that, within an organisation, it is unlikely that once a decision is made that the decision will be overturned by a colleague, and even less likely if the organisations culture is to treat those outside the organisation as a potential enemy. This usually happens in badly managed businesses with a low staff morale.

  • In reply to Anonymous:

    I have used similar grounds for a NR client who sold 3 properties in 2015/16 (losses on all 3) which only came to my attention at the time of Tax return preparation. They were initially issued with the fixed and daily penalties. After a 3 month wait the penalty appeal was rejected, however, HMRC said the daily penalties "following a review of representations from a number of customers and agents" have been withdrawn.

    Seriously! So the balance payable is now £1800 where the following excuse they said will not be treated as reasonable by HMRC:
    1. pressure of work
    2. lack of information
    3. we didn't send a reminder
    4. ignorance of basic law

    I find that number 3 is against their own guidance where penalties can only be issued where reminders have been sent?!

    The options open now are ask for an independent review (not holding my breath that the outcome will be different) or Tribunal (why should my client be bearing additional cost for this). It seems therefore NR taxpayers are being held to ransom and are on completely different penalty regime to UK resident ones.
  • Anonymous
    Anonymous

    In reply to Fozia Muddassir:

    When I heard George Osborne this morning referring to terrible policy, I had hoped he was talking about the NRCGT return filing requirements that he introduced. Sadly, he was talking about the Tory Manifesto document, although pot and kettle did spring to mind and that indeed was without any mention of a Cornish pasty.

    HMRC has at least recognised that previously law abiding taxpayers were unaware of the filing obligation and agreed to cancel all daily penalties that have been charged in respect of late NRCGT return filings (usually £900). Available figures show that 36% of all taxpayers who have filed a NRCGT return did so late. The actual percentage of taxpayers who did not file an NRCGT return on time must surely be even higher because an unquantifiable number may still not yet appreciate they should have filed this return (or incorrectly decided not to do so, given the £1,600 penalties HMRC were charging once a return was filed late).

    The news of the cancellation of the daily penalties was broken by a taxpayer who followed advice on a forum to write and complain to his MP. I would therefore urge all affected taxpayers to write to their MPs particularly as another election may follow later this year.

    Many taxpayers who have filed an NRCGT return late will still face fixed penalties of £700. Whilst some taxpayers have managed to have these cancelled (for reasons HMRC are unwilling to discuss, even though seemingly identical cases have had penalty appeals refused), those who are unsuccessful will need to show they had a reasonable excuse for filing late to have the remaining penalties quashed. If an individual's lawyer (professionally trained in dealing with property disposals) has not heard of the return/flagged the filing requirement, the individual may have a reasonable excuse because they were relying on a professional to tell them what they needed to do. Indeed, is it reasonable for HMRC to expect taxpayers to read their website on a daily basis to glean knowledge that their own capital gains tax technical staff openly admit is outside their own knowledge? It will be interesting to see how this situation develops.
  • Anonymous
    Anonymous

    In reply to Anonymous:

    Hopefully the following article will help to persuade HMRC that they need to reconsider the NRCGT late tax return fixed penalties that are still in place.

    www.taxationweb.co.uk/.../hmrcs-penalty-regime-laid-bare.html
  • Anonymous
    Anonymous

    In reply to Anonymous:

    My name is Rik, I don't know how to join, or if I even should be allowed as a layman. Great article in the link above. I commend Lee for his sense of humour and genuine desire to see HMRC live up to its own aspirations. I now live in Canada and have many times praised the pragmatic approach to taxation in the UK. Sadly, despite my best attempts to be honest, whilst not employing a tax professional (!), I find myself (and my wife, yes, they double down on the same transaction!) a victim of this scam. I would try and get the money back from my solicitor, but honestly, conveyancing is really quite reasonable in the UK and I feel bad for trying to get back about twice the amount I paid them in fees! We declared the sale in our Canadian tax returns, thus proving, I thought, that we were not thieving tax avoiders (we owe no UK tax). Canada and UK certainly share tax information, so would this not count in my favour? Of course not. I would really like to test this in a tribunal, but I have to employ a representative or travel to the UK myself (and my wife). Can you imagine? For 700 pounds each? Less than the air fare. The tribunal system did not consider people travelling from abroad, because, ...... they don't pay tax in the uk generally...... Can we try a class action type approach? I'm afraid I have no clue how to do this. Would Gina Miller help us???
  • Anonymous
    Anonymous

    In reply to Anonymous:

    Do I have to attend a hearing?

    HM Courts & Tribunals Service provide guidance (leaflets T242, T243 and T244 – use the link to court and tribunal forms) on what happens after you make your appeal and on what happens at a hearing. We recommend that you read this in addition to our guidance below.

    At the level of the First-tier Tribunal, there are different ways in which your case can be handled depending on the facts, such as what it is you are appealing about and how complex your case is.

    Some cases are usually dealt with on paper. This means that the tribunal will just review papers submitted by HMRC and by you, and make their decision from those.

    If your case is to be dealt with in this way, it is important that your papers are neat and tidy so that the tribunal can follow them. Read the section ‘How do I prepare my case?’, which guides you through organising your papers. If you are told your case will be dealt with on paper, but you would prefer to have a hearing, you can request one.

    If you have any special needs, which they might need to cater for at the hearing, for example, if you have a disability, you should tell the tribunal in advance.