CGT Penalty - Called to God

A reasonable excuse?

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A brief summary:

Late residential CGT filing (prompted)

Penalities applied.

Client was called by God to become a Nun. Disposed of property for that reason. Solicitor did not inform her of potential CGT liability and precluded such advice in TOBs. Client was in a state of relious turmoil at the time of the transaction and unaware of obligations. Only became aware on prompting from HMRC.

Would you regard this as a reasonable excuse?

Replies (21)

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By Roland195
25th Jun 2024 09:58

I'd imagine if you laid it on thick about her calling, that resulted in an immediate need to dispose of her worldly goods (and probably help if she gave away the proceeds) then HMRC might get a bit nervous about the religious aspect.

Chances slightly better than Nun.

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Replying to Roland195:
James Dean
By JamesFD
25th Jun 2024 10:08

Chances slightly better than Nun.

[/quote]

That made me chuckle!

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Replying to Roland195:
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By Justin Bryant
25th Jun 2024 10:20

Yes, assuming she did not make a habit of it.

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By SkyBlue22
25th Jun 2024 10:03

Doubt HMRC would consider it a reasonable excuse, but I've managed to get penalties for things cancelled for other reasons that HMRC wouldn't consider reasonable. Worst case is you try and they say no.

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By Cat's whiskers
25th Jun 2024 10:08

Give it a go. They might accept just to make you go away. You'll give them a giggle if nothing else.

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By Duggimon
25th Jun 2024 10:20

While there's a narrow definition of reasonable excuse there is a wider and more nebulous alternate option of "at HMRC's discretion" which has served me well over the years, particularly when appealing on behalf of priests for whom I file tax returns, so give it a go.

There's never really any reason not to appeal a penalty if you think you've any chance at all.

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By I'msorryIhaven'taclue
25th Jun 2024 10:28

A clear case of Force Majeure, specifically an Act of God.

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RLI
By lionofludesch
25th Jun 2024 10:36

Render unto Caesar the things that are Caesar's.

Mark 12.13-17

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By Truthsayer
25th Jun 2024 11:15

'Would you regard this as a reasonable excuse?'

No, nor would HMRC if they were truthful, but they might allow it simply because they haven't got the resources to defend against all appeals.

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By fawltybasil2575
25th Jun 2024 12:06

@ JamesFD (OP).

If one takes at face value the facts in your initial question, including that:-

"Client was called by God to become a Nun. Disposed of property for that reason".

"Client was in a state of reli(gi)ous turmoil at the time of the transaction and unaware of obligations".

"Only became aware on prompting from HMRC",

and since frankly it should normally simple to provide at least circumstantial evidence of all this by reference to the nun's current family and other personal circumstances, address, lifestyle etc etc (and, in contrast, their corresonding lifestyle, personal circumstances prior to then) IMHO you should have no difficulty in establishing the Reasonable Excuse argument.

[As part of your acting, you will presumably have ascertained how the proceeds of the property disposal have been defrayed, and I would be interested to know, albeit it might not be relevant to the matter at issue, how they were defrayed (as indeed Roland has alluded to in his post above)].

Basil.

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Replying to fawltybasil2575:
James Dean
By JamesFD
25th Jun 2024 12:30

Thank you Basil. I have spent a significant amount of time on the telephone and in correspondence with the client and have no reason to doubt her narrative (or her fervour).

The proceeds of the disposal are held in a savings account with some small sums being used to assist others.

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Replying to JamesFD:
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By I'msorryIhaven'taclue
25th Jun 2024 13:04

Isn't she required to renounce all her worldly goods? Does that include savings accounts?

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Replying to I'msorryIhaven'taclue:
By Democratus
26th Jun 2024 08:39

Reminds me of Father Ted....funds were just "resting" in his account!

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Replying to I'msorryIhaven'taclue:
By Democratus
26th Jun 2024 08:39

Reminds me of Father Ted....funds were just "resting" in his account!

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Replying to JamesFD:
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By FactChecker
25th Jun 2024 15:12

Hmm, my sympathies (which of course should have nothing to do with either what the legislation says or how HMRC interprets it) were leaning heavily towards everyone else's 'have a go / nothing to lose' ... until you mentioned the Savings Account.
Unless that's a very temporary resting place (en route to charitable disposal), it sounds very much like a safety net for someone who's calling is as yet undecided.
Not that that might not be a sensible option, but it undermines the 'turmoil' angle.

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By Paul Crowley
25th Jun 2024 12:32

Neither the estate agent nor the solicitor advised her to take advice about CGT?
I bet the solicitor get out clause specifically recommends taking tax advice on the disposal.

But chances are that a good argument will succeed

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By CJaneH
25th Jun 2024 15:23

Why are solicitors who deal with conveyancing of property allowed to be ignorant of CGT and escape liability by reason of the small print. At least in big print near the top of a letter they should advise the client to consult an accountant or tax advisor with experience in CGT.

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By Matrix
26th Jun 2024 09:10

If she has taken a vow of poverty the penalties should help her achieve her objective.

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By Wiganer Elaine
26th Jun 2024 11:36

I am assuming this was a second property and not her PPR?

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By dmmarler
26th Jun 2024 15:01

My understanding is that nuns have to pay a "dowry" on entering a convent. The dowry can be returned to her if she leaves the convent. The interest from the dowry helps the convent defray expenses and, if she stays that long, the dowry becomes the convent's property when she dies. It is likely the savings account is the dowry, and will be held in her own name rather than her religious one. The dowry provides her with accommodation rights, and in my view is therefore her investment in her new home. As she is investing the proceeds of the sale of her house (and chattels) in her new life and home, there should be no CGT.
If the nun has her head in heaven and does not understand how the system works, why not speak to the Mother Superior (CEO) or Prioress (CFO) or Steward (depending on the size of the establishment) to get some more detail?

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Replying to dmmarler:
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By Tax Dragon
26th Jun 2024 15:58

dmmarler wrote:

As she is investing the proceeds of the sale of her house (and chattels) in her new life and home, there should be no CGT.

That may be how PRR should work (rollover rather than exemption); it's not how it does work.

In any event she's not buying real estate, so yours is a very creative interpretation of the non-existent legislation.

Talking of misinterpretation... I initially read "called to God" as meaning dead.

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