In Ian Smith v HMRC [2018] TC6622 a taxpayer successfully appealed penalties for late filing of a NRCGT return, his ignorance of the law was a reasonable excuse, although the judge thought that relying on a conveyancer lawyer to advise him on tax would not have been.

  • The taxpayer was Canadian and non-UK resident. 
  • He disposed of his UK property and made a loss for Capital Gains Tax (CGT) purposes.
  • He had been within UK self assessment for many years and filed his own tax returns.
  • He failed to file a Non-Resident’s CGT (NRGCT) return within the 30 day time limit as he assumed that he reported his loss under self assessment.
  • He engaged a conveyancing lawyer to dispose of his UK property.
  • He was late filing he NRCGT return as he was unaware of the new obligation.
  • HMRC issued penalties for late filing.
  • He appealed to the FTT.

Judge Beare considered whether ignorance of the law could be a reasonable excuse for late filing and considered the conflicting decisions on this topic by his fellow FTT judges, Judge Thomas and Judge Mosedale, (see How to appeal a tax penalty: reasonable excuse). He decided to approach the matter in a different way and chose to look at whether under the circumstances the taxpayer had acted reasonably, as a responsible taxpayer would be expected to do.

He found:

  1. No reason why the Appellant should have gone onto HMRC’s website to look for the existence of any additional filing obligations
  2. No reason why the Appellant should have sought the advice of a tax expert in relation to the disposal, given that it was obvious to him that he made a loss and he could easily report that under self assessment.
  3. That it would have been unreasonable to rely on a conveyancing lawyer to provide tax advice, and so there could not be any reliance on a third part in this case.

Taking it all into account the FTT found that Appellant had a reasonable excuse for his failure to be aware of the filing obligation until shortly before he filed the NRCGT return.


This is alternative approach to the vexing question of whether ignorance of the law is a reasonable excuse in the context of NRCGT returns. 

Some interesting observations: for HMRC: surely it is entirely reasonable to expect non-residents to obtain tax advice on UK taxes after all if you are not living here and you are not subscribing to a site like this or reading some kind of tax news you are not going to be keeping up to date with our tax system? For the taxpayer, surely your conveyancers might be expected to mention something. They do deal with stamp duty land tax (SDLT) and attend to SDLT return filing after all. 

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 link

Ian Smith v HMRC [2018] TC6622