In Alan Jackson v HMRC [2018] TC06329, the First Tier Tribunal (FTT) again considered the question of whether a non-UK resident could be expected to know about the Non-Resident CGT regime. In this case, the answer was yes but the penalties were reduced to £100.
Since 6 April 2015, disposals of UK residential property by non-UK residents have been subject to Non-Resident Capital Gains Tax (NRCGT). A return must be filed within 30 days of the disposal.
- Jackson disposed of two UK properties in 2015/16, with no gain arising.
- He did not realise that the rules had changed, creating an additional filing obligation, until he look to complete his normal self assessment return for the year.
- He filed the two NRCGT returns and HMRC raised penalties (£100 for being late, £300 for being six months late and £300 for being twelve months late in each case).
The FTT found that
- Jackson’s ignorance of the change in the law was not a reasonable excuse.
- In line with the decision in Welland, as the taxpayer had had no opportunity to correct his behaviour between the two late returns, special relief should be given to reduce the penalties on the second return to nil.
- HMRC had miscalculated the 6 and 12 month penalties:
- Penalties were raised under more than one paragraph of Schedule 55
- The interaction rule in paragraph 17(3) caps the total penalty to 100% of the tax due
- There was nil liability to tax so the FTT reduced these penalties to £nil.
- The only penalty to stand was the initial £100 penalty for the first late filing.
Comment:
This is the fifth case on late filing penalties for NRCGT. The FTT considered three of the previous decisions (McGreevy, Hesketh and Welland) but not Saunders.
This is the third case, and second judge, to find against the taxpayer.
Like most of these case, this was heard “on the papers”, rather than the taxpayer presenting his evidence in person. It is possible the FTT may have come to a different conclusion.
Links:
Grounds for Appeal: Reasonable Excuse
Non-Resident CGT: UK residential property
External: Alan Jackson v HMRC [2018] TC06329
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