NRCGT return

[etf]

I'm currently preparing a NRCGT return to report the sale of a UK residential property by a non-UK resident.

I'd read that a NRCGT return must include a calculation of the chargeable gain or allowable loss and the amount of UK CGT due, unless a taxpayer has already been issued with a self assessment tax return by HMRC. This standpoint is supported by HMRC's opening notes on the return, but mandatory questions arising part way through the return which require a calculation to be able to answer them made me doubt myself. I therefore decided to call HMRC to double check with the following results:

Call 1) advised HMRC had set up a specialist helpline to handle such enquiries. When I tried the number provided I got a message saying the number was not recognised.

Call 2) given another helpline number which turned out to be for the non-resident landlord unit (nothing to do with my CGT question).

Call 3) told I should have been transferred to a specialist member of staff. Advised by the specialist that a calculation must be submitted with the return.

Call 4) Ditto Call 3) from a different specialist.

Call 5) The third specialist confirmed a calculation is not required if a self assessment tax return has been issued (but the mandatory questions must be answered, which defeats the object of being able to notify the disposal on the NRCGT return and follow up later with a full calculation/self assessment tax return in a more reasonable timeframe-expats don't often have access to their full records whilst overseas).

I hope the above summary helps others avoid the time I wasted this afternoon. I'd also be interested to learn what approach others have taken where information is not available in the 30 day window to prepare answers to the mandatory questions. The knowledgeable specialist from call 5 suggested "NONE" will often be accepted as a work around, but it does seem to be a waste of time having to insert to such responses.

KR

etf

[RMC]

1. You can avoid having to submit a return and pay tax within 30 days if you already have an existing relationship with HMRC and have been already filing tax returns, e.g. as a non-resident landlord.
2. HMRC have no doubt advised you to look up the rules at gov.uk website. Here it is:
https://www.gov.uk/guidance/capital-gai ... l-property

[etf]

In my original post, I was struggling to reconcile the conflict between:

i) the NRCGT return requiring an individual to enter an amount of non-resident CGT due.

ii) tax legislation stating that individuals within self assessment do not need to assess the CGT payable until their return tax return is filed.

I now understand HMRC accept there is an inconsistency and this is attributable to them having to produce the NRCGT return before the legislation was finalised. Planning...what planning???

The mandarins who think it is possible for someone in a forest in Borneo to complete a NRCGT return, without their records and within 30 days of the conveyance, in my humble opinion, need their heads testing.

Penalties for late filing can quickly escalate to £1,600 for a filing obligation that I suspect a reasonable taxpayer may be totally unaware of. The penalties are based on late filings of self assessment tax returns where you receive reminders advising you that a return is outstanding. With this nothing and then BANG...a £1,600 penalty.

As a glimmer of hope for those caught by these penalties, another forum suggests HMRC has accepted an appeal on grounds of ignorance. This suggests HMRC agree this new filing obligation needs further thought and the resulting penalties are totally out of kilter with the crime.

KR

etf

[bd6759]

The legislation is quite clear. There can only be one self assessment. A self assessment is made when a return is given in response to a notice under s8. Where a person has not been given notice, the rules state that a return and self assessment must be made unilaterally within 30 days.

If a peron in a forest in Borneo is able to complete the paperwwork required to dispose of an asset sitated in the UK, he is quite clearly in the position to report that sale at the correct time.

[maths]

TMA 1970 s12ZE provides for the inclusion in the NRCGT return of an advance self assessment.

However, TMA 1970 s12ZG overrides this requirement if, inter alia, the individual concerned has on or before the date by which the NRCGT return is to be made has been given a notice under TMA 1970 ss8/8A.

[etf]

It is apparent from my Victor Meldrew rants that I have certain misgivings regarding the introduction of the NRCGT return.

i) The duplication in reporting

As Maths and bd6759 have confirmed, where an individual has been issued with a self assessment return, it is not necessary to submit a capital gains tax calculation with the NRCGT return. I may be missing something here, but if HMRC are content for the reporting and any required tax payment to be made via the self assessment process, why is it still necessary for taxpayers to complete a ten page NRCGT return?

The return asks taxpayers to confirm:

- whether they are going to nominate one of the alternative methods of computation; and

- if claims for reliefs are going to be made.

To answer the above questions it may be necessary to prepare detailed calculations requiring information that may not be readily available to a taxpayer who is abroad, within the 30 day reporting period.

The layout of the form will not win too many design awards either with several sections headed:

“For funds and certain companies only”

“Ignore this section”

However, when you pass over those sections you subsequently notice they contain compulsory questions (*indicates required information).

HMRC already has a history of asking taxpayers for information they don’t require. Recent examples are the tax return service company question and questions regarding non-UK residence on the 2013/14 self assessment tax return.

As Keith Gordon stated in one of his articles:

“In short, the statutory basis for a personal tax return is limited to that information that enables an individual’s tax liability for the year to be calculated”.

With the above statement in mind, why is it compulsory to enter the telephone number of the taxpayer on the NRCGT return? Does HMRC really phone taxpayers overseas?

ii) Penalty regime

My main concern however, are the NRCGT return late filing penalties that are being levied on individuals who have previously always attempted to comply with their UK tax filing obligations. I’m sure if 100 expats were asked what they have to do within 30 days of conveying a UK property, the percentage answering, ”file a NRCGT return” would be quite small (certainly it appears the filing obligation has escaped the notice of some legal advisers).

Penalties for filing a NRCGT return late can quickly escalate to £1,600 even though in many cases there will be no CGT to pay. I could go into a bar, hit someone over the head with a bottle and probably get a smaller fine. Which action really is more serious?

The NRCGT return penalties are based on the self assessment tax return penalty regime. Under self assessment a taxpayer will become aware that their return is outstanding (if they didn’t already realise) as HMRC issue penalty notices to the taxpayer, but this does not happen with a NRCGT return penalty. The taxpayer just receives a demand for £1,600 with no prior warning from HMRC (not a great incentive to file a late return is it!).

I’m sure I recall watching an HMRC lady recently confirming that when MTD is introduced, HMRC will adopt a ‘softly softly’ approach regarding penalties. Well to my mind HMRC should:

- treat taxpayers due a NRCGT penalty in a similar manner-the tax system needs to be equitable (unless you are a premier league footballer)

- replace the existing penalty regime with something more proportionate.

I’m sorry for this further rant, but the penalties being charged for an innocent oversight are just crazy in my opinion.

KR

etf

[SteLacca]

If you are simply notifying disposal and will include the gain on the SATR, then the alternative computation method is "Self Assessment individual tax return", and no computation needs to be sent with the NRCGT return.

And where do you get 10 pages from? It's a 3 page online submission, most of which is just checkboxes or nothing at all.

[etf]

Thanks for your post.

For something that is agitating me more than anything previously I've come across in my 33 years in tax, I do appear to currently be crusading alone.

When I press print, a 10 page NRCGT return is generated out of my printer. The return contains a number of sections that at first appear not applicable, but then you notice they contain compulsory questions marked with a red asterisk which have to be answered. Unless I'm missing something, the return was designed by a 2 year old.

To add salt to the wound HMRC currently think it is acceptable to take 2 1/2 months to consider an appeal.

I have copied a post from another forum which indicates HMRC do however accept appeals and so I'd encourage anyone whose circumstances match to lodge an appeal. Presumably HMRC will treat everyone equitably?

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."

[etf]

Whilst support for my stand against the NRCGT penalty regime has been muted, the post copied below suggests those in charge appreciate the argument is not without merit.

Thank you eft, we have asked HMRC to review our failed appeal and if that also fails we will ask for a tribunal. Our MP wrote to HMRC on our behalf and they say that they will refund some of the daily penalties but so far we have not heard anything from them ourselves so we do not yet know by how much this will reduce the the fines.

I'd encourage any taxpayers hit with a NRCGT penalty, but who have been successful on appeal, to post their experiences to help others in a similar position.

For those in receipt of penalties, the message is clear...ensure you write to your MP.

[etf]

The following post suggests the NRCGT penalty regime is now chaotic at best (my bold type). Perhaps time to re-group and start again.

Hi both my wife and I were fined £1300 each for late declaration of CGT on our home in UK as we were French residents. (In a split year)
We appealed and the appeal was accepted, fines cancelled.
I was not told why the appeal was accepted but I suspect it was because we were in a split tax year between UK and France. I note that the HMRC website now lists split tax year as no reason for not making the declaration.
Secondly I asked the HMRC when the website went live notifying people of the change in the rules and this was not until Nov 2016. In my appeal I noted that we checked the rules when we put the property on the market in August 2016. So unless I continued to check every month how was I to know they changed the rules on us.