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Where Taxpayers and Advisers Meet

NRCGT return

Posts: 581
Joined: Mon Nov 02, 2009 5:25 pm

Re: NRCGT return

Postby etf » Wed Sep 19, 2018 11:32 am

So how did HMRC determine ignorance of the filing requirement was a reasonable excuse from the accountant's letter below? Is there something special that I am overlooking?

I have successfully appealed against a NRCGT penalty. The wording of my letter was as follows and it was accepted without question:

"Further to your email of 17 June 2016, we write to appeal against the penalty of £800 issued to our client for the late submission of the non-resident capital gains tax return.

The circumstances are as follows:-

Our client has been living in Australia since 2012, during which time he rented out his property. The income has been declared on my client’s income tax return each year.

Due to my client’s absence from the UK, he was unaware of the new rules that came into force on 6 April 2015, requiring the CGT return to be completed within 30 days of the date of sale of the property. Hence, no CGT return was completed when the property was sold in November 2015.

When it came to our attention, the non-resident CGT return was filed without delay. You will see from the return that there is no tax due and therefore there has been no loss to HMRC. Both we and our client apologise for the delay in filing the return but are confident that you will be able to see that it was not a deliberate action.

We trust that, in the circumstances, the penalty can be removed.

In the meantime, our client has paid the amount due and so, if our appeal is successful, we should be grateful if this amount could be refunded as soon as possible."

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Joined: Wed Aug 06, 2008 3:25 pm

Re: NRCGT return

Postby maths » Wed Sep 19, 2018 3:12 pm

Whilst not wishing in any way to denigrate the efforts of etf i do not believe that the matter is as simple as portrayed i.e. ignorance of the law is no excuse v ignorance of the law is a reasonable excuse.

The Upper Tribunal in Perrin v HMRC [2018] is almost certainly worth a read.

It's always a little dangerous to extract bits from a judgement (a point alluded to by bd above in his/her post with which I agree) but in Perrin the following comments were made:

".... that to be a reasonable excuse the excuse must not only be genuine but also objectively reasonable when the circumstances and attributes of the actual taxpayer are taken into account.
The FTT therefore identified the correct legal test for deciding whether the facts that it had found amounted to a reasonable excuse".

(my italics).

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Re: NRCGT return

Postby etf » Thu Sep 20, 2018 8:00 am

I have copied below the circumstances of Dr Wong who lost her NRCGT tribunal case:

It only became apparent to Dr Wong, when completing the self-assessment return
for the 2015/16 tax year, that a NRCGT return should have been completed when the
property was sold in September 2015. Up until that point Dr Wong was wholly
unaware of the change in the law. The NRCGT return was immediately filed without
delay on 12 January 2017, which was 260 days late.

They appear very similar to the circumstances of the taxpayer which I posted yesterday (I suggest we make up a name and refer to that taxpayer as Graham Gooch). If I were Dr Wong, I would feel pretty fed up having read that HMRC had cancelled Graham's NRCGT penalties.

And it gets a lot worse than that because HMRC accepted 771 other NRCGT appeals in the period to 31 December 2017, so potentially there are 771 other Graham Goochs on the loose to taunt Dr Wong...we had our penalties didn't..hehehe. HMRC cannot currently refute this suggestion because they claim they do not record the reason why appeals are accepted.

The question to answer is has HMRC treated these taxpayers even-handedly (fairly)?

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Joined: Mon Nov 06, 2017 5:11 pm

Re: NRCGT return

Postby LSH » Thu Sep 20, 2018 8:48 am

I agree ETF - he would be rightly feel he'd been treated unfairly.

The WONG case was the one that worried me the most as there were a lot of parallels to my own situation. Their property had been on the market before the change in law like mine had, and there was no tax to pay as a result of the eventual sale (same for me). We also both became aware of the requirement at the SA stage. The only difference that I can see in our cases (I assume - there is no info for them, but their property sold much later than mine), is that mine was actually under offer when the new law came in. Eventually (after much pushing) HMRC dropped the case against me, but clearly WONG wasn't so fortunate. Given that HMRC did not really give any hint as to why my appeal was finally granted, it's hard to know whether the property being 'under offer' came into play or not.

What is very clear though - is that there was barely any publicity prior to or subsequent to the law change. The scant 'publicity' that was there, was not focused on the average tax payer and I made that very clear in my final communication with them. The very fact that HMRC have admitted to taking a 'soft touch' at first, clearly also demonstrates that not everyone has been treated fairly and equitably despite it being their responsibility to do so.

There is nothing that I found that showed HMRC had mitigated the risk of the professionals who commented in the consultation document saying the proposal was "unworkable" and who had suggested that filing with SA was more appropriate. Given that such professionals had deemed the proposal "unworkable" I find it even more incredible that there was no huge publicity drive on this, nor any effort whatsoever to capture a large part of the affected population (for instance, via emails using the HMRC database of people completing non-resident and rental forms etc). I pointed all this out in my final letter to them and perhaps this is what turned my case around - that they would not want those facts published in black and white if my case had gone to FTT. All the 'publicity' releases were targeting tax agents and none prior to the law change directed the reader to any requirement whatsoever to file within 30 days. Despite the government saying they expected the "professionals involved in the sale to facilitate the [filing] process" even if they don't file/pay on behalf of their clients, it is clear that lawyers are NOT advising sellers on this.

I hope for everyone else being unduly affected by this that HMRC start behaving more reasonably. But I can't see it somehow.

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Re: NRCGT return

Postby etf » Thu Sep 27, 2018 1:05 pm

As nobody has yet disagreed with my suggestion that Dr Wong was unfairly treated when compared to Graham Gooch (made up name, but real situation) I am going to try and add David Wickenden to Goochie's gang. His circumstances also appear similar to Dr Wong's, but unlike Dr Wong he did not have to pay any NRCGT late filing penalties:

The Appellant chiefly relies in his appeal on the argument that his failure to be
aware of his obligation to file an NRCGT return until very shortly before he belatedly
did so is, in the particular circumstances of this case, a reasonable excuse.
The Appellant alleges that the new regime for requiring the filing of NRCGT
returns – which had only recently taken effect when the disposal of the Property was
completed - was neither widely known nor widely publicized. He concedes that there
were web pages in existence at the time of the disposal which would have alerted him
to the filing requirement if he had known to look for them but argues that he had no
reason to think that he ought to look for them because he knew that no capital gains
tax liability arose in respect of the disposal and the Respondents had failed adequately
to publicize the change in law.

Another taxpayer to taunt Dr Wong?

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Re: NRCGT return

Postby bd6759 » Thu Sep 27, 2018 9:41 pm

Maths gave the answer above.
".... that to be a reasonable excuse the excuse must not only be genuine but also objectively reasonable when the circumstances and attributes of the actual taxpayer are taken into account."

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Re: NRCGT return

Postby etf » Fri Oct 05, 2018 10:14 am

What was it about the particular circumstances and attributes of Goochie's situation detailed in his accountant's appeal letter that allowed his NRCGT penalties to be cancelled whereas Dr Wong had to pay up? The accountant's letter is very short and concise and so shouldn't take long to analyse.

Posts: 581
Joined: Mon Nov 02, 2009 5:25 pm

Re: NRCGT return

Postby etf » Mon Oct 08, 2018 10:19 am

With apologies to Maths and I'm sure many others who have lost the will to live when it comes to NRCGT tribunal cases, here is a link to another HMRC loss-Slocock.

I think it is unacceptable for HMRC to say they will treat taxpayers even-handedly and then do exactly the opposite (does anyone disagree with my Goochie v Dr Wong analysis?) and for that reason alone, I think it is worth continuing to shine a spotlight on their behaviour.

PS-I believe we are still waiting for a case won by the taxpayer to be published by Judge Hellier which was heard months ago.

Posts: 25
Joined: Mon Nov 06, 2017 5:11 pm

Re: NRCGT return

Postby LSH » Mon Oct 08, 2018 11:44 am

Thanks ETF. Another very interesting read - particularly the points on 'reasonable excuse' and reliance on a third party. He again brought up the fact that HMRC did not apply penalties for the first 13 months:

"158. HMRC say that they did not issue late filing penalties where a late CGT return was received by 7 May 2016 (in other words where the date of completion fell in the year 2015-16, the first year that the liability to tax and the requirement for the return 20 existed. The reason for this was “to allow taxpayers and agents sufficient time to become familiar with them”.

159. But why would they need a year to become familiar with a simple system about which information was clearly available from April 2015? And how would taxpayers potentially affected by the legislation who were not up to date with the outer reaches of FA 2015 but who were disposing, like the appellant, of a property in 2015-16 know they needed to be familiar? This “amnesty” amounts to HMRC admitting that the system was obscure and unfamiliar. "

Couldn't agree more!

Posts: 581
Joined: Mon Nov 02, 2009 5:25 pm

Re: NRCGT return

Postby etf » Mon Oct 08, 2018 1:14 pm

My October edition of Tax Adviser has just dropped on the doormat. It includes an article by Keith Gordon on NRCGT-see link below:

It is clear there are good people out there who appreciate how poorly this new filing requirement was introduced, but sadly none of them appear to be employed in positions of influence at HMRC.

The following paragraph gives a flavour of the article (my bold):

Personally, I find HMRC's stock response 'the information was on our website' to have been spectacularly unhelpful. It is, in my view, equivalent to being told that a particular pin was in a haystack, several years after the event, when at the relevant time one did not know that there was even a pin that needed to be found.

It is a shame some tribunal judges have taken a different view on something, which for me, is crystal clear.

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