NRCGT return

[etf]

http://financeandtax.decisions.tribunals.gov.uk//judgmentfiles/j10305/TC06329.pdf

Another NRCGT tribunal case; another end result.

However HMRC consider that there are no special circumstances that gave rise to the late submission and the Tribunal considers
that HMRC’s decision on that is flawed. It must be unusual for an appellant to receive
35 eight penalties on one day in respect of two failures. The fact that all the penalties were
issued on the same day clearly gave the appellant no opportunity to correct his
behaviour or learn from his first mistake. It is clear that the system of penalties is
designed in such a way as to progressively penalise a taxpayer until he rectifies his
error. Eight penalties in one day denied the appellant that opportunity. Therefore the
40 Tribunal has decided there were special circumstances and reduces the penalty to nil.
15
40. In respect of the two 6 month penalties and the two 12 month penalties being four
penalties each of £300 HMRC have not applied these in accordance with legislation
and therefore the appeal is allowed in respect of all of them.


On a 1st skim reading a significant win on points for the taxpayer (Jackson). How do the two taxpayers judged by Judge Mosedale feel now?

How does all of this sit with the 'even-handed' treatment HMRC promise in the taxpayers charter? Answer, not very well.

KR

etf

[bd6759]

http://financeandtax.decisions.tribunals.gov.uk//judgmentfiles/j10305/TC06329.pdf

On a 1st skim reading a significant win on points for the taxpayer (Jackson). How do the two taxpayers judged by Judge Mosedale feel now?

How does all of this sit with the 'even-handed' treatment HMRC promise in the taxpayers charter? Answer, not very well.

KR

etf

Sheppard agrees with Mosedale's ruling.

Penalties were reduced because they exceeded the tax. Sheppard totally mis-read 17(3). That section does not apply to the fixed penalties (and he quotes the original version, not the version amended by FA2010).

Sheppard substituted HMRCs view on special circumstances with his own. That was not strictly in his jursidiction. HMRC has the discretion to make a decision. That decision can only be overturned if the decison is flawed (using judicial review standards). A dedcion is not flawed just because the judge might have come to a different decision

This is unlikely to be challenged given the small amount.

[etf]

bd6759, you definitely receive a gold medal for producing a reply so quickly in the early hours.

My point regarding the Judge Mosedale taxpayers is that they are required to pay £700 penalties whilst the taxpayers in the other 3 tribunal cases either have to pay no penalty or a £100 penalty. The difference may well be small to HMRC, but to some taxpayers selling their UK home £700 may be a significant amount.

What I think is clear, is taxpayers are not receiving treatment that is even handed. HMRC either has to admit they are ignoring the taxpayers charter (result = potential anarchy as taxpayers could then decide to ignore the sections that require them to be honest etc), or HMRC has to regularise their penalty raising policy-remember they have already accepted 772 NRCGT appeals in a fairly short period. Do you really believe a well run department would not record the reason why appeals have been accepted? Why are HMRC unwilling to release this information?

As rbk123 earlier post stated, it was not as though HMRC were not warned about how unworkable a 30 day filing deadline would be, they were warned and given an alternative option-see consultation point below:

Many respondents also felt that having 30 days in which to submit a
calculation would be unworkable, and a number thought the self-assessment time frame
would be more reasonable

Fortunately, 3 of the 4 tribunal judges have seen the big picture and have used some common sense. For me, as soon as I saw Judge Mosedale's suggestion that HMRC's tax helpline is the answer to this problem, my immediate reaction was here we have someone who is not in touch with the real world. No matter how impressive the rest of her analysis may or may not be, that statement is lodged in the little amount of grey matter I possess.

[someone]

I have followed this thread with interest, albeit no personal stake.

But I understand etf's point.

"Taxation should be fair, and taxation should be seen to be fair"

I think there's something very unfair about someone who owes no tax (or owes tax and declares and pays it at the usual time) being *very heavily* fined for not filling in a form that basically says 'tell you later'

Ironically, the people who I assume this form filling was supposed to catch, those who have no other relationship with HMRC, are being disincentivised for coming clean.

I can imagine the mirth in a foreign court.

HMRC "Please make this person pay us oodles of lolly"
Judge "Why do they owe it"
HMRC "They didn't fill in this form"
Judge "What would the form have told you"
HMRC "That they didn't owe us anything"

IIUC, the tax at stake will increase with time. And the penalties may start looking more reasonable as a result.

[bd6759]

I don't think that the legislation achieves its aim. I've said that before. If a person is minded not to report a gain, adding a further requirement to send a return is not going to change that. I do believe that there has to be an early reporting requirement for foreign owners. I would have preferred there to have been a withholding tax imposed on the conveyancer, which would be released as soon as the CGT return was submitted. No need for penalties.

Legislation is created by parliament, not HMRC.

HMRC have applied the penalties as the law allows. It is the Tribunals that have casued the disparity. Sheppard reduced the penalty because he didn't read the law correctly.
You cant blame HMRC for that. The recent decisions fall on reasonable excuse and special circumstances. These are subjective and do not apply generally: the must apply to specific circumstances so cannot be used as a precedent.

Its CET, so not that late.

[etf]

Who didn't advertise the penalty amnesty?
Who came up with the random 8 May 2016 end of amnesty date to hit taxpayers with £1,600 penalties as soon as possible?
Who didn't advertise the end of the random amnesty?
Who allowed 772 appeals in the period 8 May 2016 to 31 December 2017 but denied appeals for taxpayers with identical circumstances in the same disposal tax year? = not even handed.
Who is refusing to release data about the successful appeals?
Who was less than truthful regarding the reason why daily penalties were cancelled?
Who spent thousands on advertising self assessment deadlines, but issued a few tweets for NRCGT?
Which team refuses to speak with its customers?

By all means throw politicians into the mix, but I don't think HMRC have covered themselves in glory here.

[etf]

A summary of the recent Jackson case from Smith and Williamson (my bold):


2.3 Penalties for late submission of non-resident CGT return
While there have been two recent cases found in favour of the taxpayer, this case follows the latest
appeals in finding that ignorance of the laws is not a reasonable excuse for the late filing of a nonresident
CGT (NRCGT) return. The FTT did however cancel all but £100 of the £1,400 of outstanding
penalties.
The taxpayer disposed of two properties, but filed the required NRCGT returns after the filing deadline. In
both cases no CGT was due. In respect of each property, initial £100 late fling penalties were issued, along
with a £300 penalty for failure to file within 6 months of the filing date and a further £300 penalty for
failure to file within 12 months of the filing date.
The FTT found that ignorance of the law is not a reasonable excuse and, as such, the £100 late filing
penalty on the first disposal stood. The taxpayer had not been allowed time to learn from his mistake,
though, and so there were special circumstance in relation to the second property. The £100 late filing
penalty was cancelled accordingly. This was in line with the decision in Welland v HMRC [2017] UKFTT 870
(TC).
The FTT also found that HMRC had overlooked penalty provisions that state that ‘Where P is liable for a
penalty under more than one paragraph of this Schedule which is determined by reference to a liability
to tax, the aggregate of the amounts of those penalties must not exceed 100% of the liability to tax’.
This was relevant as the two £300 penalties were within different paragraphs. As the liability to tax was
nil, HMRC had not applied these penalties in line with the legislation and all of the £300 penalties were
cancelled.
Jackson v HMRC [2018] UKFTT 0064 (TC)

[etf]

A link below to a further summary of the Jackson case in Taxation Magazine:

The judge concluded that none of the £300 penalties should have been issued.

It appears it is better to be very late with a tax return filing than just late. This amplifies the message that our tax system is far too complex so we just end up in a mess.

Hopefully sooner or later one of these Tribunal judges will ask HMRC to produce evidence why 772 NRCGT appeals were accepted. I suspect when this data finds the light of day it will prove HMRC has not dealt with taxpayers in an even handed manner as it is required to do under the Taxpayers Charter. At least the Aussie cricketers made a prompted disclosure. How long will it take HMRC?


https://www.taxation.co.uk/Articles/2018/03/27/337799/late-filing-penalties-non-resident-cgt

[pldazzle]

There are two points about NRCGT that I find intensely worrying.

Firstly, the maxim "ignorance is no excuse" (while all very well in itself) appears to have been blithely accepted as applying to non-UK residents with equal force as to UK residents. I can see no indication of any of the judges in the recent five FTT cases having put that to the test: they all appear to have unquestioningly taken HMRC's word for it. I would have thought that in general non-UK residents - even ones owning UK residential property - would have far less pressing cause than UK residents to acquaint themselves impromptu with UK tax law, whether online or otherwise, and that at the very least an argument on those lines would merit exploration.

Secondly, there's the issue of proportionality. I think I'm right in saying that the NRCGT liability in each of the recent FTT cases was zero, but let's be generous and call it £1. Penalties totalling £700 (per Judge Mosedale) would then equate to 70,000 per cent of the tax. Irrespective of HMRC's arguments regarding proportionality vis-a-vis the tax system as a whole, would anyone like to suggest how a 70,000% penalty can reasonably be said to be consistent with proportionality for the individual taxpayer?

[bd6759]

I can see no indication of any of the judges in the recent five FTT cases having put that to the test: they all appear to have unquestioningly taken HMRC's word for it.

Then you haven't read them. The history and application of the maxim has been discussed in depth.