In Ann Rowan-Smith v HMRC [2018] TC6623 a non resident successfully appealed late filing penalties. She failed to report the disposal of her UK property within the 30 day deadline as she assumed that gains would be reported under Self Assessment. Her claim to have relied on the advice of a conveyancing solicitor was rejected.
- The taxpayer lived in Canada and she sold he UK residential property
- Unaware of the new 30 day reporting obligation for Non-Resident Capital Gains Tax (NRCGT) she filed her NRCGT return after she realised that the gain could not be reported via a self assessment return.
- HMRC assessed her with £700 of Late Filing penalties.
- She appealed against the assessment claiming that she had a Reasonable Excuse for her failure: she had made a genuine mistake because the new filing requirement was not well publicised. Further her conveyancing lawyer had not advised her of the filing deadline and she was entitled to expect that a professional conveyancing solicitor would advise her on her legal obligations in relation to the disposal.
Judge Beare found:
- There was no reason why the Appellant should have sought the advice of a tax expert in relation to the disposal, she had not made a chargeable gain and so she thought she would be able to deal with the disposal perfectly adequately in her self-assessment return without recourse to expert advice
- HMRC did not accord as much publicity to this new filing requirement as, in retrospect, they might now be wishing. The fact that the Appellant’s solicitor, who, although not a tax expert, was familiar with conveyancing, appears to have been unaware of the new filing obligation tends to support this conclusion.
- Given the relative obscurity of the requirement in question, more publicity could have been given to its introduction and that it is this which has prompted the volume of appeals which have now occurred
- It was reasonable to believe that that tax would be collected in the same way as capital gains tax in general.
The appeal was allowed on the basis that the taxpayer had acted reasonably and made a genuine mistake.
In terms of reliance on a third party the judge found:
- One would expect a conveyancing solicitor to be aware in general terms of the tax obligations associated with conveyancing.
- Tax legislation is complex and is for that reason generally the subject of specialist advice.
- So, if the solicitor in question had been a tax specialist, then the Appellant’s reliance argument would have had more substance.
Reliance on a third party was therefore not a reasonable excuse.
Links to our practical guides
Grounds for Appeal: Reasonable Excuse
Non-Resident CGT: UK residential property
The Non-Residents' Tax Toolkit
External links
