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Where Taxpayers and Advisers Meet

NRCGT return

someone
Posts:692
Joined:Mon Feb 13, 2017 10:09 am
Re: NRCGT return

Postby someone » Tue May 15, 2018 12:25 pm

It astonishes me that the courts can say with a straight face that the requirement to file a NRCGT return within 30 days was well publicised and the taxpayer has no excuse for not realising but can simultaneously say that lawyers specialising in property law and AIUI being required to keep up to date with the law in order to practice, don't have a duty of care to highlight the filing requirement.

There is a vast difference between :
You need to file a NRCGT return within 30 days but we cannot advise you on what you should put on it. Here's the money from your completed sale. (I understand there are at least three different ways to calculate the tax due, any of which might be advantageous to the taxpayer)

and

Your sale is completed, here's your money.


In my recent (resident) transfer of equity, my solicitors left me to contact HMRC to find what should be put on the land tax return to get the SDLT right. But they did tell me it had to be filed within 30 days.

etf
Posts:1278
Joined:Mon Nov 02, 2009 5:25 pm

Re: NRCGT return

Postby etf » Wed May 16, 2018 8:09 am

An extract from Lee Sharpe's recent article agreeing with someone's comments:

https://www.taxationweb.co.uk/tax-articles/hmrc-administration-practice-methods/hmrc-may-not-always-be-right-but-is-never-wrong.html


We have also written at some length about how HMRC’s understanding of the taxpayer’s defence of “reasonable excuse” is so tenuous that its severe and lengthy criticism has been a regular feature of tax cases. HMRC appears incapable of acknowledging that there is even a problem, let alone of addressing it.

We have also written more recently about HMRC’s appalling attitude to NRCGT returns and the penalties it has charged to ignorant (innocent?) non-residents disposing of UK property – a new tax regime whose claim to fame, other than its penalty rate, is that HMRC appears genuinely to believe that 4 missives from its Twitter account are sufficient to warn the 7billion people on planet Earth (who are not otherwise taxable in the UK) that the UK is now taxing foreigners. It is losing case after case at Tribunal, but seems happy to press on regardless.

etf
Posts:1278
Joined:Mon Nov 02, 2009 5:25 pm

Re: NRCGT return

Postby etf » Mon Jun 04, 2018 4:22 pm

This post is a bit off track, but potentially highlights the uneven handed treatment currently exhibited by HMRC when imposing NRCGT penalties.

Where a non-resident landlord receives their rent direct from a tenant, the tenant is usually obliged to withhold tax from their rent before paying it over to HMRC, unless HMRC has authorised them to pay it to their landlord gross. Penalties can be imposed on a tenant if they fail to make the necessary returns to HMRC, although in my 34 years in expatriate tax I have never heard of one of these penalties being levied. I am sure I recall speaking with HMRC staff and being told 'we appreciate a tenant will probably not know about their reporting obligation and so we adopt a common sense approach and do not routinely issue penalties'. A very sensible approach to adopt if I may say so. A freedom of information request asking for the number of penalties levied on tenants during the 2017 calendar year will demonstrate whether my understanding is still correct.

Assuming the above analysis does still hang together, how does it sit with the Taxpayers Charter which confirms HMRC will treat taxpayers even handedly?

My answer is 'very uncomfortably', because if HMRC can adopt a common sense approach as detailed above, but act like Donald Trump when it comes to NRCGT penalties (an equally obscure filing obligation as demonstrated by the 44% of taxpayers who were late filing in the last quarter), the playing field looks more like the Himalayas than the even surface of Wembley Stadium which should surely be HMRC's goal.

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: NRCGT return

Postby bd6759 » Mon Jun 04, 2018 7:12 pm

You just made that up.

With 34 years experience (23 of which will be within the NRL regime) you should know why someone who didn't know that they had to account for tax cannot be charged a penalty for not doing so.

etf
Posts:1278
Joined:Mon Nov 02, 2009 5:25 pm

Re: NRCGT return

Postby etf » Tue Jun 05, 2018 8:20 am

Thank you for your reply.

Sorry if I'm being dull, but what bit do you think I am making up?

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: NRCGT return

Postby bd6759 » Tue Jun 05, 2018 5:14 pm

Your anecdotal discussion with HMRC.

HMRC cannot impose a penalty if the tenant does not know that they are required to account for the tax. Your analogy and premise are way wide of the mark.

etf
Posts:1278
Joined:Mon Nov 02, 2009 5:25 pm

Re: NRCGT return

Postby etf » Tue Jun 05, 2018 8:05 pm

Thank you for your further reply.

My anecdotal discussion is fact not fiction.

Many moons ago I spoke with the non-resident landlord team to check whether a non-resident landlord who had been late in making an application to receive his rent gross should expect backdated tax deductions from his tenant. HMRC confirmed they adopt a common sense approach and do not penalise tenants who are unaware of their withholding obligation.


6.2 Tenants have the right to deduct any tax they have to pay under the Scheme from their rent, or from any other money owing to the non-resident landlord. They also have the right to recover from the landlord any tax they have to pay under the scheme where they did not deduct it from their rent or other money owing.


Whilst I have never acted for a tenant, the point you have made is noted and I thank you for bringing it to my attention.

Returning to the subject of NRCGT penalties, I would be interested to know whether you disagree with any of the points on my HMRC charge sheet copied below and whether you think they are handling this well:

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?

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: NRCGT return

Postby bd6759 » Tue Jun 05, 2018 10:46 pm

Tenants only have a withholding obligation if they have been told by HMRC that they have one. The NRL staff will have known that, which is why I believe you are making it up. Any penalty would be under s98 TMA, making it a completely different kettle of fish from sch 55.

I've said already that the NRCGT legislation does not achieve what it sets out to do.

etf
Posts:1278
Joined:Mon Nov 02, 2009 5:25 pm

Re: NRCGT return

Postby etf » Wed Jun 06, 2018 7:32 am

I think my opening post on this thread provides evidence that you don't always receive perfect advice from specialist staff. This is not a criticism of the staff but the complexity of our tax system.

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: NRCGT return

Postby bd6759 » Wed Jun 06, 2018 5:06 pm

Which makes your anecdote, if true, pointless.

The problem is that you don't really understand the legislation, you don't understand the meaning of "reasonable excuse", and don't understand the purpose of the tax tribunal. You seem to believe that there should be a list of excuses that a person should be able to invoke and HMRC should allow all appeals without applying the statutory test.

The penalty regime at sch 55 was not enacted to cover NRCGT returns. It was enacted to cover all returns, and it applies to a plethora of different returns that are needed in different situations. HMRC cannot apply a different interpretation to different returns, and neither should the tribunal.

If conveyancers were required to deduct 10% withholding tax from these transactions, I am sure that the returns would be submitted on time.


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