My client has notified me and hence HMRC 8+ months late, of the sale of a UK residential property. It should have gone in online within 30 days of completion of the sale. The resultant penalty for the late notification is £1,300. The post April 2015 gain is only £200 on which clearly there is no CGT liability. To charge such a draconian fine to a compliant taxpayer, who assumed that he would send in the information on his 2016 tax return in the normal way, seems contrary to natural justice, especially as my client lives in Asia where there is unlikely to be much coverage in the media about UK non-resident tax. Have other agents seen similar fines? If so does anyone have any advice about how to formulate a reasonable excuse claim?
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Because "ignorance of the law is no excuse" then I don't see what claim you can possibly hope to make as a reasonable excuse.
As usual a client pays the price because they have carried out a significant transaction without discussing with their accountant.
I'd want to have a word with the solicitor that did the conveyancing, and perhaps get sight of the advice they gave the client in this regard. I suspect that the solicitor advised the client to seek professional advice re the tax implications and that the client ignored that advice. If so then my sympathy would be very limited.
Are there any disposal costs that may have reduced the gain to nil? The return is to be made elective where there is no gain or loss (does this mean chargeable gain pre AE? If the gain can be reduced to nil it should solve the problem. Appeal.
https://ion.icaew.com/taxfaculty/b/weblog/posts/nonresidentcgtondisposal...
I agree it's squarely the solicitor's fault. A request for a £1.3k credit note from them may be the simplest solution.
I don't know who you're agreeing with, nobody said that. I would expect, as is customary in these matters, that the solicitor advised the client to seek professional tax advice as they were not qualified to provide it.
I suppose it may be the case that they did not in which case I would agree with you but in my experience solicitors are generally quite good at making sure they're not open to being sued.
Obviously if the solicitor said that then it's squarely the client's problem if he did not get advice at the time & he should have nothing to complain about.
I am happy to confirm that the supply of solicitors that are "not too bright" is a plentiful one.
Or as your client lives in Asia he could ignore the fine. What could/would HMRC do effectively do about it?
You say client assumed that he would enter it in his return for 2016 as normal. Clearly if the client was accustomed to make an annual NR tax return this would in my view constitute a reasonable excuse in that the gain would be returned with the annual tax return .... not an unreasonable excuse...
Hope that this helps
www.wamstaxltd.com
You say client assumed that he would enter it in his return for 2016 as normal. Clearly if the client was accustomed to make an annual NR tax return this would in my view constitute a reasonable excuse in that the gain would be returned with the annual tax return .... not an unreasonable excuse...
Hope that this helps
www.wamstaxltd.com
Think you have misinterpreted the NG/NL argument. My reading is that only comes into play where there is NG/NL by virtue of the NG/NL provisions, not just because there happens to be no gain nor loss.
Justin Bryant has alluded to that above.
my client will need to pay up.
No they won't - I doubt that HMRC will go to the trouble of an extradition order to recoup £1.3k.
The penalties are pretty much unenforceable at the moment, which makes the legislation pointless. One solution (probably the only one) is to make the solicitor liable. Yeah, I'm sure that would be perfectly acceptable to the legal profession.
Appeal. HMRC sometimes rescind when the penalty is very out of line with the related tax bill.
Very interestingly HMRC are now, as a matter of policy, not charging the £10 daily penalty for late NRCGT returns (they are still charging the other late filing penalties) and are refunding cases where this has been paid. I am not entirely* sure on what basis HMRC can pick & choose the penalties it decides to collect, but it is a no-brainer not to argue with that and appeal and apply for refunds where necessary.
*These recent cases may explain this policy change, as HMRC seem to need to send the taxpayer advance notice etc. for these daily penalties to be enforceable.
http://www.bailii.org/uk/cases/UKFTT/TC/2017/TC05814.html
http://www.bailii.org/cgi-bin/format.cgi?doc=/uk/cases/UKFTT/TC/2017/TC0...(sudall)
http://financeandtax.decisions.tribunals.gov.uk/judgmentfiles/j9886/TC05...
There are inconclusive comments on this prior notice requirement here (which has nearly half a million views - so this is clearly pretty topical) before the above case was published:
https://ion.icaew.com/taxfaculty/f/tax-news---forum/4755/nrcgt-penalty#p...
Edit: this has now been conclusively confirmed here: https://ion.icaew.com/taxfaculty/b/weblog/posts/late-nrcgt-returns-hmrc-...