Is ignorance of the change in the law for Non-Resident's Capital Gains Tax return a valid excuse for late filing the new return, or can you claim reliance on an adviser, even where they are a tax expert?

Judges in the First Tier Tax Tribunal have been taking differing views on this matter.

What we know:

  • The new rules were not well publicised.
  • Many conveyancing lawyers seem to have been unaware of the changes, however conveyancers are not tax experts.

The uncertainties

  • It is not easy to say whether the NRCGT regime is so especially complex that it requires taxpayers to obtain expert advice and assistance: it rather depends on the individual taxpayer.
  • If it is not complex then why were so many conveyancing lawyers unaware of new 30 day filing deadline?
  • Should you rely on a property lawyer/conveyancer for basic tax advice, after all they do advise on stamp duty land tax?
  • If the rules are not complex then why would you need to rely on an adviser?
  • If the rules are not complex then would you not suppose that you simply report your gains under normal self assessment?
  • Are the rules so complex that all non residents should engage tax specialists?

Case Judge Appeal allowed Reasonable excuse claimed Other factors

Ignorance of the law

Reliance on adviser Or, Special circumstances
Rachel McGreevy Thomas Yes Claimed and accepted  No claimed  There were special circumstances because the gain was fully exempt under PRR and the taxpayer filed a self assessment return in which she expected to be able to declare the gain
Patsy-Anne Sauders Connell Yes  Claimed and accepted    She was in Self Assessment and any person making a capital loss would normally expect to report and pay any CGT under Self Assessment
Robert Clive Welland Mosedale Penalty reduced Claimed but not accepted Not claimed: however solicitor did not mention it Penalties for 3 Returns: taxpayer unable to learn from his mistakes so penalties were reduced

David Hesketh

Jennifer Hesketh

Mosedale No Claimed but not accepted Not claimed: Solicitor did not mention it  
Alan Jackson Shepherd  Yes, in part  Claimed but not accepted  Not claimed  Penalties for 2 Returns: taxpayer unable to learn from his mistakes so penalties were reduced. Penalties were miscalculated by HMRC so reduced further
Raymond Hart Brannan Yes   Reliance on adviser  
Steven Harrop  Scott No  Not accepted  as an excuse    
Mei Chung Wong  Scott No  Not accepted  as an excuse    
John Nugent  Scott No  Not accepted as an excuse    
Timothy Cobb & Caroline Wenn  Scott  No  Not accepted as an excuse    
Eric Scowcroft Thomas Yes Yes, accepted: not well publicised by HMRC Yes: conveyancer/Solicitor did not mention it  

Alison Bradshaw

Richard Bradshaw

Thomas Yes Yes, not well publicised by HMRC

Yes: conveyancer/Solicitor did not mention it.

Agent Update 51 which HMRC had referred to was issued 5 months after the conveyancing date

 
Nigel Pitcock & Karen Pitcock Scott No No, non residents should check the law Conveyancer/Solicitor did not mention it  
Lauren Murdock Brown No  No, non residents should check the law   Para 17 cap apparently not considered
Ann Rowan-Smith Beare  Yes  Claimed and accepted:     agreed a genuine error, thought gains reported under normal SA rules
Barry Gilbert Hellier  No  Claimed not accepted as no evidence of trying to find out the law: non residents should check the law    

Links to our practical guides

How to Appeal a Tax Penalty

Penalties: Late filing

Grounds for Appeal: Reasonable Excuse

Non-Resident CGT: UK residential property

The Non-Residents' Tax Toolkit

Non-Resident Landlords Scheme

External links

All the cases above have links through the individual write up.