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Where Taxpayers and Advisers Meet

NRCGT return

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

Postby etf » Mon Aug 06, 2018 8:39 am

A link below to an article which includes a summary of NRCGT tribunal cases to date (Judge H case which is a taxpayer win has not yet been published).

https://www.taxjournal.com/articles/nrcgt-tax-return-late-filing-penalties-confusion-all-round-01082018

The Taxpayers Charter states HMRC will treat taxpayers even-handedly. Taking that statement at face value, if HMRC accept tribunal decisions allowing ignorance of the law/reliance on an adviser as a reasonable excuse, they should do that consistently, otherwise they are not treating taxpayers even-handedly and are thus breaking the Charter.

The situation has not been helped by some judges making statements so far wide of the mark, that even that penalty attempt from Diana Ross was more accurate e.g. legal advisers have no duty of care to flag the 30 day filing requirement (even HMRC agree this is claptrap).

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

Re: NRCGT return

Postby etf » Mon Aug 20, 2018 9:33 am

Another shed load of NRCGT tribunal cases have been published: http://financeandtax.decisions.tribunals.gov.uk//Aspx/default.aspx

Smith-NON-RESIDENT CAPITAL GAINS TAX – penalties for failing to file a return on time – whether ignorance of the obligation to file the return could amount to a reasonable excuse – yes – appeal upheld

Rowan-Smith-NON-RESIDENT CAPITAL GAINS TAX – penalties for failing to file a return on time – whether ignorance of the obligation to file the return could amount to a reasonable excuse – yes – appeal upheld

Chapman-CAPITAL GAINS TAX – penalties – late filing of non-resident capital gains tax returns – whether special circumstances arise – no – appeal dismissed

Murdoch-CAPITAL GAINS TAX – penalties – late filing of non-resident capital gains tax returns – Appellant claimed to be unaware of the time limit for submission of the return - whether reasonable excuse – no – appeal dismissed.

Does anyone seriously believe taxpayers are receiving even-handed outcomes?

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

Re: NRCGT return

Postby bd6759 » Mon Aug 20, 2018 10:07 pm

Does anyone seriously believe taxpayers are receiving even-handed outcomes?
Have you asked the Ministry of Justice that question?

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

Re: NRCGT return

Postby someone » Tue Aug 21, 2018 9:28 am

I only skimmed them but the ones that were denied seemed to give the judge very little to work with. I think they only pleaded 'special circumstances' and not 'reasonable excuse' which is what succeeded in the other two.

The successful ones show what I consider to be 'legal logic' The taxpayer couldn't rely on the conveyancing solicitor to tell them they needed to file (so that wouldn't be reasonable excuse) but because they didn't the rules weren't well publicised and so it was reasonable excuse. (yes, I'm paraphrasing and probably misunderstood)

I think it was the successful ones where the judge did say that given the taxpayer was in SA and had made a loss, it wasn't 'reasonable' to expect them to appoint a tax advisor.

Noone has yet brought up that consultation stuff where 'the existing parties were expected to facilitate the NRCGT process' And if it wasn't reasonable to appoint a tax advisor then I'm stumped as to how you're supposed to know (especially those in SA)

The successful two (H&W I think) were well argued. The ones that lost, not so (The judge comments about only having one email and one letter to work from)

How much does a tribunal case cost? I'm surprised someone would go to tribunal over, IIRC 500GBP and then be so laid back about it.


One of the ones that was denied did have a small tax bill.

OTOH, one of the ones that failed was, IIUC, someone working abroad for a year selling his deceased mother's house - and the judge said this was a common event that most people got right (seems pretty exceptional to me!)

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

Re: NRCGT return

Postby etf » Tue Aug 21, 2018 9:58 am

I've established that Jon Thompson is responsible for ensuring the Taxpayers Charter pledges are followed e.g. treating all taxpayers even-handedly/fairly.

Following the astonishing decrease in successful NRCGT appeals (from 32% to only 3%), I have asked Jon to review the 772 successful appeals in the period to 31 December 2017 to see how many were attributable to ignorance of the filing requirement. If HMRC allowed ignorance as a reasonable excuse in some cases they should be consistent with that approach, otherwise taxpayers are not being treated even-handedly.

You may recall that my earlier request was swatted away, but I think the above statistics make it very difficult for someone who takes their role seriously to not now look into this matter closely. Something must surely have changed internally at HMRC for the successful appeal rate to drop off a cliff. I'll update the thread when I receive Jon's reply.

I'm afraid the Ministry of Justice is not on my day to day correspondence radar. What outcome do you believe an approach might achieve?

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

Re: NRCGT return

Postby etf » Tue Aug 21, 2018 10:46 am

I liked the following summary in the Smith case. A reasonable/reasoned approach unlike the analysis of some other judges who live in a world of unreasonable perfection:

Turning then to the application of the above test in the context of the facts in
this appeal, my view is that the Appellant’s failure to file the NRCGT return before he
did so was reasonable, given the circumstances of this case. This is, first, because
there was no reason for the Appellant to have suspected that, in addition to reporting
5 the disposal in his normal self-assessment return in respect of the relevant tax year of
assessment, he would also need to make another, separate and self-standing, tax return
in relation to the disposal. And, therefore, there was no reason why the Appellant
should have gone onto the Respondents’ website to look for the existence of any such
additional filing obligation. Moreover, there was no reason why the Appellant should
10 have sought the advice of a tax expert in relation to the disposal, given that it was
obvious to him from the numbers involved that the disposal had not given rise to a
chargeable gain and so he would be able to deal with the disposal perfectly adequately
in his self-assessment return without recourse to expert advice. For those two reasons,
I believe that a hypothetical responsible person, who was cognizant of his obligations
15 in relation to tax and intended to comply with those obligations, might very well have
acted in the same way as the Appellant.


For me, however, the additional analysis copied below is flawed overlooking the Government's own thoughts in this area flagged by LSH/Someone in this thread.

. For completeness in relation to the reasonable excuse issue, I should add that,
although Section 118(2) TMA 1970 does not contain the language which appears in
paragraph 23 of Schedule 55, to the effect that reliance on a third party can be a
reasonable excuse for a taxpayer only if the taxpayer took reasonable care to avoid the
5 failure, I believe that the two provisions should be applied in exactly the same way in
that regard. In other words, I would apply Section 118(2) TMA 1970 on the basis
that, unless the taxpayer in question took reasonable care to avoid the failure in
question, his or her reliance on the third party would not amount to a reasonable
excuse.
10 45. And, in this case, were it not for my conclusion that the Appellant’s ignorance
of the obligation to file the relevant return amounts to a reasonable excuse in and of
itself, I would not have been inclined to conclude that the Appellant’s reliance on his
conveyancing solicitor to inform him of the relevant obligation met the standard of
reasonable care. This is because, whilst the fact that the Appellant’s conveyancing
15 solicitor appears not to have been aware of the new filing obligation tends to support
the proposition that insufficient publicity was given to the obligation – after all, one
would expect a conveyancing solicitor to be aware in general terms of the tax
obligations associated with conveyancing – I do not myself consider that a taxpayer
who relies on a conveyancing solicitor to apprise him of, or to fulfil his
20 responsibilities under, the tax legislation has a reasonable excuse simply by virtue of
that reliance. Tax legislation is complex and is for that reason generally the subject of
specialist advice. So, if the solicitor in question had been a tax specialist, then the
Appellant’s reliance argument would have had more substance. As it is, I do not
think that the Appellant’s reliance on his conveyancing solicitor to point out a new
25 tax-related filing obligation is, in and of itself, a reasonable excuse. However, I do
think that, nevertheless, for the reasons set out above, the Appellant had a reasonable
excuse for his failure to be aware of the filing obligation until shortly before he filed
the NRCGT return

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

Re: NRCGT return

Postby bd6759 » Tue Aug 21, 2018 7:54 pm

I'm afraid the Ministry of Justice is not on my day to day correspondence radar. What outcome do you believe an approach might achieve?
It would be the proper place to raise concerns about the inconsistent rulings by tribunal judges.

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

Re: NRCGT return

Postby etf » Thu Aug 23, 2018 10:04 am

Crikey, even John Grisham would struggle keeping up with this plot:

Gilbert NRCGT tribunal summary-http://financeandtax.decisions.tribunals.gov.uk//judgmentfiles/j10589/TC06627.pdf

Procedure – procedural irregularity – decision not set aside

5. In their letter of 3 July 2018 Mr Gilbert's accountants seek to raise a further
argument: namely that HMRC had on occasion sent Mr Gilbert e-mails entitled "help
in paying taxes for landlords".
25 6. I accept that this is something which could have been relevant to the question of
whether Mr Gilbert might reasonably have expected HMRC to give warning of
changes in the law affecting non-resident landlords, and accordingly could have been
relevant to whether or not he had a reasonable excuse for his failure to make a return
in time, and therefore relevant to the outcome of the appeal.

rbk123
Posts:26
Joined:Tue May 30, 2017 1:27 am

Re: NRCGT return

Postby rbk123 » Thu Aug 23, 2018 11:57 pm

It is blatantly obvious that HMRC is not treating each appeal equally, neither is the First Tier Tribunal. The judge's decision appears to be based on their starting point 1) This is the law, you broke the law, the penalties are upheld 2) What caused you to break the law? Because you didn't know? Why didn't you know? Because HMRC didn't tell you. I uphold your appeal; HMRC failed to inform you as an individual and as the person they would hold liable for late filing. This is part of what we used for our arguments against the penalties in our successful appeal; we still don't have the full transcript and our case still doesn't appear on the Website. We have again e-mailed FTT and asked for clarification.
We agree with Mr Gilbert's accountants that HMRC had made contact with us on an individual basis. On leaving the UK, we completed Form P85 "Leaving the United Kingdom" and NRL1 "Non Resident Landlords - individuals" and were each issued with a Unique Tax Reference. We were sent a leaflet welcoming us to the CNR (Centre for Non Resdients) We continued to receive annual reminders to file SA Tax Returns. Mr K received a flyer from HMRC in 2012 asking "Should I be in Self Assessment?" Mrs K recived an e-mail from HMRC asking for more information on our rental property business. HMRC had therefore, on a number of occasions, contacted us direct regarding our tax matters so why could they not have sent out a flyer in SA reminders regarding NRCGT, even if only where to find the relevant information. This was one of our arguments in our appeal; we don't know if our Judge took this into consideration because we don't have the full transcript.
In correspondence with our MP Robert Buckland (who also happens to be the Solicitor General) he received a response from HM Treasury's Rt Hon Mel Stride where there is no attempt to resolve WHY we didn't know about the new NRCGT process; all he states is, if we are not happy, there is a clear appeals process. He states "Penalties are used to encourage taxpayers to meet their obligations, and to be proportionate to the offence. HMRC puts a great deal of care into developing penalty systems which ensure sanctions are applied fairly and consistently." so all he is doing is toeing the party line. It is a shame HMRC doesn't put more care into advising taxpayers of new processes!
Despite our successful appeal, we are still NOT happy; we believe it is time for the Ministry of Justice to investigate what HMRC has been up to and their continued failure, if the continued high current rates of late filing resulting in penalties are to be believed, to admit culpability and mend a process of notification that is clearly not fit for purpose.
In the document rejecting our second internal appeal, HMRC stated that we DID know about the separate new process for filing NRCGT which implies we were lying; when we challenged this, we were told the member of staff was acting on behalf of HMRC. This is a clear breach of the Taxpayers Charter to which HMRC is supposed to adhere.

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

Re: NRCGT return

Postby etf » Wed Sep 05, 2018 9:28 am

In the most recent taxpayer survey of performance against HMRC’s taxpayer charter, the tax authority performs poorly on certain key criteria. Depressingly, only 34% believe HMRC apply penalties and sanctions equally.

It would be expected that given the public’s negative perception of this area, a well-run organisation would seek to:

- put in place systems and controls to monitor whether they are applying penalties fairly; and

- take complaints suggesting they are failing to apply penalties even-handedly seriously.

My own experience suggests nothing could be further from the truth.

In the period 8 May 2016 to 31 December 2017 HMRC allowed 772 appeals against NRCGT penalties. I asked HMRC to confirm how many of those appeals were attributable to ignorance of the filing requirement. HMRC confirmed it does not keep such records = unbelievable!

Following a freedom of information request it was confirmed that the NRCGT appeal success rate had reduced to just 3% in the quarter ended 30 June 2018 (it was over 30% in an earlier period).This suggests HMRC has probably changed the way it deals with NRCGT appeals so taxpayers are not receiving even-handed treatment.

On receipt of the above data, I wrote to Jon Thompson (the HMRC person responsible for ensuring the rules of the Taxpayers Charter are applied) and asked him once again to confirm how many of those 772 successful appeals were attributable to ignorance of the filing requirement. To date my request remains unanswered despite a reminder. I will continue to update this thread on a weekly basis until JT provides a reply.


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