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Where Taxpayers and Advisers Meet

NRCGT return

etf
Posts:1253
Joined:Mon Nov 02, 2009 5:25 pm
Re: NRCGT return

Postby etf » Tue Apr 19, 2022 9:52 am

As this thread details HMRC raised NRCGT late filing penalties into millions of pounds from taxpayers who simply were unaware that they were obliged to file a UK property capital gains tax return within 30 days of the sale completion date. There were quite a few tax tribunal cases where it was clear HMRC thought it a reasonable requirement that taxpayers should be aware of the filing requirement (despite a lack of publicity). The 30 day filing deadline was changed to 60 days for completion dates on or after 27 October 2021.

I have copied below a copy of HMRC guidance for 2021/22 which was updated on 6 April 2022.
Guidance
Non-resident Capital Gains for land and property in the UK (Self Assessment helpsheet HS307)
Updated 6 April 2022


It includes the following passage:

4.1 non-resident Capital Gains Tax Return
When you sold or disposed of UK property and land, you should have told HMRC within 30 days of completion of conveyance, even if:

you had no tax to pay
you made a loss
you were registered for Self Assessment
If you need to complete non-resident Capital Gains Tax return and have not already done so, you need to do this as soon as possible.

As well as submitting your non-resident Capital Gains Tax return within 30 days you also had to pay any non-resident Capital Gains Tax due within the same 30-day period. If you miss the deadline penalties and interest may be due.


Surely if HMRC think the public should know filing deadlines their staff responsible for issuing guidance should be reaching that bar.

etf
Posts:1253
Joined:Mon Nov 02, 2009 5:25 pm

Re: NRCGT return

Postby etf » Wed Jun 15, 2022 9:57 am

I noticed the following post on Accountingweb


HMRC not charging late payment penalties / interest

In our practice we seem to submit a lot of CGT on residential property returns, and inevitably a small percentage are late due to clients not providing records etc.

HMRC always charge a £100 late filing penalty in these cases, but recently seem to have stopped charging late payment interest or penalties.

Have others experienced the same? I'm not aware of any update/published change in policy.


Does anyone have any inside information?

etf
Posts:1253
Joined:Mon Nov 02, 2009 5:25 pm

Re: NRCGT return

Postby etf » Wed Jun 15, 2022 10:10 am

This following reader response to the previous post made me smile:

bernard michael
13th Jun 2022 10:48
Perhaps the penalty dept are working from home.

etf
Posts:1253
Joined:Mon Nov 02, 2009 5:25 pm

Re: NRCGT return

Postby etf » Wed Jun 22, 2022 6:25 am

I have checked with my professional body and it was confirmed they are not aware of any official announcement from HMRC about the lack of CGT property return penalties currently being levied. It all seems a bit strange at a time when the Government requires as much revenue as possible to pay for Covid times.

In the absence of an announcement, I have come up with my own theory.

As a preamble, I suspect the word 'shit' has never been used before on this forum. As a 7 year old I can remember sniggering when my Turkey farmer neighbour used it to describe what came out of the rear end of his turkeys. He assured me it was an anglo-saxon word and not a swear word and as I occasionally see him on Match the Day sitting with Delia Smith he is clearly a man who can be trusted (he is also a past Turkey farmer of the year).

So back to my theory. MTD for income tax is on the horizon and a topic that when any article is published on accountingweb provokes a near universal negative reaction from the accounting community of tsunami proportions. I have seen a number of posts which question the sanity of those in charge of the MTD project, with an added comment along the lines of 'well this is the mob who introduced 30/60 day CGT reporting so we know they are capable of introducing shit' (or words of a similar ilk). Indeed Rebecca Benneyworth (the Queen of tax lecturers) loosely described it as the shittiest tax reporting system ever introduced and so it must be true.

So perhaps HMRC are attempting to keep CGT property reporting out of the limelight, because everyone already knows they got just about every component of that reporting system wrong and if linked to MTD for IT it will damage it in the same way that the iceburg holed the Titanic.

Any other theories out there?

etf
Posts:1253
Joined:Mon Nov 02, 2009 5:25 pm

Re: NRCGT return

Postby etf » Mon Jul 25, 2022 5:26 pm

The embarrassment goes on for HMRC and the late filing penalties continue for taxpayers.


Timing is crucial for property returns and self assessment
by Helen Thornley
HMRC has confirmed that taxpayers who have omitted to file a property return under the so-called 60-day reporting rules must still file any missing returns now, even if they have gone on to report the disposal on their self assessment return.

22nd Jul 2022
16 comments
Since April 2020, UK residents disposing of UK residential property on which capital gains tax (CGT) is due have been required to calculate, report and pay the tax within 60 days (originally 30 days) of the completion of the transaction. The default reporting route is online via the CGT on UK Property service and taxpayers who are within self assessment must effectively report twice, completing a property return first and then finalising their CGT position for the year via their self assessment return.

These rules involved a major change in the nature and timing of CGT obligations and we received a number of queries from agents during 2020/21 filing season about what they should do if the disposal had been included in a taxpayer’s 2020/21 self assessment return but the property return had been missed. Similar queries were flagged here in Any Answers. Since HMRC’s online system blocks the submission of a property return online if a self assessment return has already been filed, agents were unsure what action to take, and we sought answers from HMRC.

Rare occurrence
In general, the submission of a self assessment return including the property disposal does not satisfy or remove the in-year reporting requirements. There is only one situation where submission of a self assessment return containing all the necessary details of the disposal can eliminate the need for a property return, but this rarely occurs.

It only applies when the timing of the disposal and the interaction of the tax year end is such that it is possible to submit a self assessment return containing all the details of the property disposal prior to the 60-day deadline that would otherwise apply for the property return. For example, an unconditional exchange of contracts in February 2022 with completion in late March 2022 followed by a hasty tax return before the 60 days elapse by the end of May would work. In all other cases, the property return should be submitted before the self assessment return – something HMRC formally only confirmed in April 2022.

Paper return
That confirmation came too late for those who, for whatever reason, had not got things in the right order for 2020/21 and were blocked from putting things right online. On 20 July 2022, HMRC shared the following advice with us and the other professional bodies: “In the situation when a taxpayer has already made an SA return and not completed a UK property return then they should complete a paper return. They should follow the normal process for doing this and contact HMRC.”

The “contact HMRC” is a reference to the need to ring HMRC to obtain the necessary paper form PPDCGT. At the same meeting, HMRC confirmed that taxpayers/agents should note on the PPDCGT return that the disposal has already been reported and the CGT paid via self assessment.

Using a paper return to correct the position in this manner is intended to be a short-term fix to this problem. HMRC are considering the longer-term approach, although they indicated that the cost of amending the system to allow online filing of a property return after submission of the self assessment return might be prohibitive.

Penalty position
Of course, the next question is what will be the consequences of making a late return in these circumstances will be. If the disposal originally arose in 2020/21, then any omitted property return could now be over two years overdue – leading to the unpleasant prospect of a penalty comprising the initial £100 late filing penalty, daily penalties, the higher of 5% of the tax or £300 for being over six months late, and a further similar charge for being over 12 months late.

We are waiting to hear from HMRC about their proposed approach to penalties. Given that we have been asking for some months what taxpayers in this position should do – during which time taxpayers have been unable to act, even if they have wanted to correct the position – we think that HMRC should give consideration as to whether it is appropriate to cap the penalties charged. For example, it might be appropriate to deem a late return to have been submitted on 31 January 2022 or the actual date of the relevant self assessment return, or allow a period of grace for people to regularise their affairs with a lower penalty than would otherwise apply. Discussions are still ongoing on this point.

Wrong order

Whatever happens, those who have filed in the wrong order – as well as those who did the process in the correct order but filed the property return late – need to be treated fairly in the context of penalties. Taxpayers who filed in the right order but late will have been issued automatically with a penalty via the system. And a taxpayer in either group might have had a reasonable excuse for failing to file, which would allow them to appeal any penalties raised.

Another alternative would be simply to cancel and refund all the penalties arising in respect of the late property returns. This is highly unlikely to happen, as penalties for the six months from June 2020 to December 2020 (the only period we have data for) were reported to amount to £1.3m.

Summary
While no one is likely to be happy about the extra time and costs of the proposed paper-return approach, HMRC are stuck between a rock and a hard place, as the alternative would be to let off some people from reporting, which would give them an unfair advantage compared to all those who have incurred the time and cost complying and create disincentives for future compliance.

The whole scenario serves only to reinforce my previous grumbles about the difficulties of trying to make an annual tax into a transaction tax.

etf
Posts:1253
Joined:Mon Nov 02, 2009 5:25 pm

Re: NRCGT return

Postby etf » Mon Jul 25, 2022 5:50 pm

Some thoughts on the new HMRC reporting system mess for those taxpayers involved (including feedback from now retired Judge Richard Thomas who often gave HMRC a bloody nose/has featured in this thread from time to time....suspect huge sighs of relief from HMRC when he announced that).


By Justin Bryant
26th May 2022 11:20
From this it seems you cannot file the 60-day CGT return anyway once the ITSA SA100 is filed: https://www.icaew.com/insights/tax-news/2022/may-2022/file-cgt-property-...

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Replying to Justin Bryant:
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By richard thomas
29th May 2022 16:52
What do they mean by "cannot"? Since penalties for non-filing will apply unless it is filed, and are not cancelled by the filing an SA return, it seems very odd that you can't stop them accruing by an online filing, but would have to resort to paper filing.

And as notoriously the two systems do not communicate, how would the CGT system know you had filed an SA return?

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Replying to richard thomas:
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By Justin Bryant
30th May 2022 09:41
It's the usual HMRC mess is the answer there.

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Replying to richard thomas:
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By Justin Bryant
30th May 2022 14:11
Also, I guess you'd have a reasonable excuse (to the extent you can't file thanks to HMRC's systems): https://www.gov.uk/government/publications/compliance-checks-penalties-i...

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etf
Posts:1253
Joined:Mon Nov 02, 2009 5:25 pm

Re: NRCGT return

Postby etf » Tue Aug 16, 2022 12:54 pm

I noticed the following post on Accountingweb


HMRC not charging late payment penalties / interest

In our practice we seem to submit a lot of CGT on residential property returns, and inevitably a small percentage are late due to clients not providing records etc.

HMRC always charge a £100 late filing penalty in these cases, but recently seem to have stopped charging late payment interest or penalties.

Have others experienced the same? I'm not aware of any update/published change in policy.

Does anyone have any inside information?
A FOI request revealed the following:

For 60-day CGT returns which were filed late online between January and June 2022, 3,372
returns have not yet been issued with an initial late filing penalty notice. This information only
relates to returns filed online through the CGT on UK Property Account. We do not hold
collated data on paper returns.
Please note, that we do not usually hold this information. We hold it on this occasion
because penalties were paused for returns made from Budget Day 2021 until May 2022,
while systems were changed to fulfil the Budget announcement, that the deadline for returns
would be extended from 30 days to 60 days. From May 2022, late filling penalties have been
issued correctly.
HMRC has been reconciling our systems to ensure that we issue penalties correctly and
were properly due. This reconciliation will lead to penalties that are within time to be issued
and which are still properly due but have not been issued previously, being triggered. In line
with the legislation, HMRC has the latter of 2 years from the filing data or 12 months after
the return was actually filed to issue penalties.

etf
Posts:1253
Joined:Mon Nov 02, 2009 5:25 pm

Re: NRCGT return

Postby etf » Wed Aug 17, 2022 7:34 am

At last - CIOT starting to hold HMRC to account
Not a question - just an observation and request to CIOT


This is a quote from a CIOT letter to HMRC regarding the paper 60 day CGT return forms. As a CIOT member I am more than happy that the CIOT take HMRC to task when they so obviously make life more difficult than it needs to be. I'd like more of the same, more often, and more bluntly put.

'Whilst HMRC’s rationale of not making paper forms freely available in order to incentivise use of the online portal is understandable, the fact remains that such forms are still a necessity for many. Whilst universal use of the online reporting system may be the ultimate goal, it is simply not a reality at the moment for many taxpayers. Until it is, making taxpayers and their agents contact HMRC for a paper form seems almost obdurate and certainly does not sit well with HMRC’s Charter which promises to ‘make things easy’ by ‘providing services that are designed around what you need to do, and are accessible, easy and quick to use, minimizing the cost to you’. By making the up to date paper forms freely available on gov.uk, you will be fulfilling that commitment by making compliance that much easier for taxpayer and agents, many of whom have no option but to use these forms. Instead of taxpayers and agents spending valuable time on the phone to HMRC, and thus further diverting your own resources, everything could be easily available on demand and thus help reduce the delays in processing the returns.'

etf
Posts:1253
Joined:Mon Nov 02, 2009 5:25 pm

Re: NRCGT return

Postby etf » Wed Aug 24, 2022 12:35 pm

CGT: 26,500 miss UK property return deadlines
by Rebecca Cave
Almost 20% of taxpayers with gains to declare from UK residential property failed to report and pay the capital gains tax on time in 2021/22.


ttps://www.accountingweb.co.uk/tax/personal-tax/cgt-26500-miss-uk-property-return-deadlines?utm_medium=email&utm_campaign=AWUKPOTW240822&utm_content=AWUKPOTW240822+CID_10f83ff6f8d02bdda669f6e486fa9bd1&utm_source=internal_cm&utm_term=Read%20more

etf
Posts:1253
Joined:Mon Nov 02, 2009 5:25 pm

Re: NRCGT return

Postby etf » Wed Aug 24, 2022 12:54 pm

As the late great tax expert Philip Hardman would have said – the UK property reporting service is a national disgrace!

You heard it first on this thread in 2016. I might have been pretty much a lone voice in Taxationweb land, but the snowball is rolling now. Long may it roll.


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