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In Nigel Pitcock & Karen Pitcock v HMRC [2018] TC6590 two non residents incurred late filing penalties for failing to notify the disposal of their UK residence within the 30 day time limit: their ignorance of the change in the law was deemed to be a reasonable excuse for their failure.

Judge Ann Scott found:

The appellants’ absence from the UK cannot in itself amount to a reasonable excuse. In fact, not living in the UK should, if anything, impose a greater obligation to ensure that all necessary requirements were met timeously.

When they decided to sell the property, they did not check what, if anything was required of them in terms of reporting the sale to HMRC. They assumed that their self-assessment returns would suffice. 

She noted the argument that none of the advisors were aware of the change in the legislation and she found that 'unfortunate' as she found that HMRC did publicise the changes very widely in the UK.

In dismissing the appeal the judge noted that 'In most countries in the world, tax law changes on what can be an alarmingly regular basis. A prudent taxpayer would have checked. It was easy to check and, as the appellants state, they were able to file the return very shortly after having done so. I conclude that lack of awareness of an obligation to file a NRCGT return was not a reasonable excuse.'

Comment

The problem is that conveyancing lawyers do not normally advise on direct tax that is unless it is specifically included in the scope of their engagement and this makes it difficult to claim reliance their advice. This is another case which considers whether ignorance in the UK's changes in tax rules is a reasonable excuse for a non-resident.

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

Nigel Pitcock & Karen Pitcock v HMRC [2018] TC6590