In Hesketh v HMRC [2017] TC06266 the First Tier Tribunal (FTT) found that the taxpayer’s ignorance of the new rules for Non-Resident Capital Gains Tax (NRCGT) was not a reasonable excuse for the late filing of their NRCGT returns and upheld the penalties. This contrasts with the opposite decision in the Rachel McGreevy case.

Since 6 April 2015, disposals of UK residential property by non-UK residents have been subject to Non-Resident Capital Gains Tax. A return must be filed within 30 days of the disposal.

In an appeal heard 'on the papers', the taxpayer pleaded ignorance of the introduction of the NRCGT regime and a lack of publicity from HMRC on the changes as a Reasonable Excuse for failing to file a NRCGT return.

The FTT considered that ignorance of the new law was not an excuse and stated that HMRC has no obligation to individually notify affected persons, even where they could reasonably anticipate this (such as Non-Resident Landlords).

The FTT’s opinion was that a reasonable person would have looked into their reporting obligations upon making a disposal and if HMRC’s guidance was unclear contact them for clarification.


Due to costs, the case was heard 'on the papers', rather than a full hearing where oral arguments are presented by the parties. With the benefit of hindsight, this may have been a false economy, as the taxpayer has historically fared better at full hearings. Costs are a problem for taxpayers in relation to penalty appeals.

The FTT has now heard four cases where the taxpayer has argued that ignorance of the law was a reasonable excuse for the late filing of a NRCGT Return. The first two, Rachel McGreevy and Patsy-Anne Saunders, were decided in favour of the taxpayer, in contrast to the above. UPDATE: a further case on this topic indicates that HMRC's penalty setting process may be flawed by failing to consider the interaction rule in paragraph 17(3) Sch 55 FA 2009. See our guide Non-Resident CGT: UK residential property for an update on the current rules on penalties and appeals.


How to Appeal a Tax Penalty

Penalties: Late filing

Grounds for Appeal: Reasonable Excuse

Non-Resident Landlords

Non-Resident CGT: UK residential property

External links

Hesketh v HMRC [2017] TC06266

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