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There are some other useful recent cases in the links below:
https://www.accountingweb.co.uk/any-answers/very-interesting-reasonable-...
https://www.accountingweb.co.uk/any-answers/a-must-read-nrcgt-penalty-ca...
In my mind, the question should be turned around in any defence argument on a complex legislative question. I spend a lot of time going through the legislation and (more's the pity) trying to interpret it according to the "Will of Parliament" and in context of other, disjointed but associated legislation.
So surely, the opening salvo when asking would a reasonable taxpayer know, is would the judge know (as an expert, and without his research assistants) that same law?
Can only agree with the above comment.
It has always seemed to me that judges and prosecutors use the "ignorance is no excuse" card when they know the result they want but can't get to it from established law.
It has also always seemed to me that this ignorance card should only be valid for gross and obvious misdemeanours: murder is bad, people with taxable income need to declare it, that sort of thing. To use that argument where the law is technical and even an expert (the accountant in one of the above cases) gets it wrong is simply stacking the deck like a card sharp.
Other than judge Thomas in the McGreevy case, all the judges quoted above have clearly bent over backwards to avoid the logical result. NRCGT was clearly a sea change, it wasn't advertised, the man on the Clapham omnibus, and especially the Sydney one, wouldn't have been aware of the change (and that's a legal principle those judges appear to have been careful to steer clear of).
I would also disagree with the apparent judicial carte blanche given here for HMRC to avoid the need to target its customer base with an update on changes like this. They have the database, they can sift for taxpayers who are both non resident and who have property income and are therefore likely to have NRCGT at some point.
But hey, what do I know? I'm only an accountant and not a policy maker.
Excellent analysis! I think HMRC rely too heavily on the income from penalties to take a less jaundiced view of when to apply them.
Surely her solicitor should have been up to speed with the change of law and advised her accordingly? If they weren't to know then how can you expect an ordinary person to be fully conversant with all the myriad of law changes that take place?
More a reflection of our inadequate legal and tax systems than the person they are trying to hold as "breaking" it...
Surely her solicitor should have been up to speed with the change of law and advised her accordingly? If they weren't to know then how can you expect an ordinary person to be fully conversant with all the myriad of law changes that take place?
More a reflection of our inadequate legal and tax systems than the person they are trying to hold as "breaking" it...
That was suggested in another of the recent cases where the taxpayer failed in their appeal. The solicitor said that they were only engaged to do the conveyancing and not to give tax advice.
That in so many of these cases there was no liability, either because there was a loss, or any gain was covered by PPR & Letting Relief should surely have some bearing in this type of case. NRCGT returns are not a regular requirement, like annual ITSA returns, and it would not seem unreasonable for the NRCGT return rules to include a need only to submit NRCGT returns as well as ITSA return including the disposal where a chargeable gain arises. HMRC would still have penalties available to it for failure to make, or notify on the ITSA return if so.
This comment resonated: "it is preposterous to expect that a document on HMRC’s website which is not easy to find for a tax judge makes invalid all possible excuses about not knowing of the NRCGT return deadlines”
Did the judge use GOV.UK to try and locate guidance I wonder? Some think GOV.UK is a hindrance to locating important and relevant info.
I fear that the already tangled position indicated in the excellent article above, is about to have some real and dangerous consequences.
HMRC claim that those who used a disguised remuneration scheme and who have loans or other forms of credit outstanding at 5th April 2019, dating back to 1999, will be required to declare these and suffer a (retrospective) tax charge. Failure to do so will result in potentially huge penalties.
Recently one such company that offered these schemes wrote to all the former clients they could still trace to advise them of this. The result was that for some 40% of the users, this was the very first indication that they had received of this arcane piece of legislation.
Repeated across all years and schemes, we might be looking at 40,000 people who, through ignorance, will not realise a need to declare, who probably do not complete SATRs as a matter of annual routine and who almost always do not have the basic information.
I could be kind and argue that - as above - people should be aware and as HMRC has been running its anti contractor campaign for close on 20 years, nobody in this space has an excuse. The reality is that HMRC does not have a coherent analysis of what a disguised remuneration scheme is and recently has sought to deny that a key part of the gateway conditions (the presence of a third party) can be ignored as it was always the intention of Parliament that it should be. Unbelievable?
Sadly, many of my clients have had their trust in HMRC eroded to such an extent that they will almost certainly believe that if penalties come their way, it's just another example of HMRC seeking to remove the contracting sector from UK Plc (in the name of "compliance") and doing so with maximum prejudice.
Not being conversant with the legal niceties of things such as NRCGT I will refrain from comment on what is a very lucid if somewhat confusing summation of the position above. However, what I think the article highlights is the potential danger to the state of abusing its right to raise laws and levy taxes without considering the social impacts that such behaviour can cause. I agree that where the tax payer should be aware of their responsibilities then there is every justification for exacting penalties. But when a new tax or process is introduced then social justice demands that those affected should be made aware of the impact upon them. Where this does not happen then to claim the protection of 'ignorance is no excuse' is to indulge in repressive behaviour and will only serve to undermine respect and thus observance of the law. I get the feeling that HMRC and successive governments are increasingly taking this path. They should be aware that it is a path that will hold great dangers for them in terms of social cohesion and compliance. The social compact holds good equally for the state as it does for the citizen. When that breaks down disorder is the result. Remember that for the majority the legal process is no longer an option as costs prohibit access. So please HMRC, play the game and show respect for those who have no choice but to comply.
Once again, all this could be avoided by changing the conveyancing pack/laws so that the question of residence needs to be asked (I'd assume they would do this anyway as Money Laundering checks), and then the requirement to consider filing a NRCGT return would be flagged up by the solicitor and they could then point to an accountant (if the NR doesn't already have one) to ensure it gets done.
I can't blame the NR for not knowing- trying to find anything relevant on the gov.uk site isn't easy and there is no real reason for the NR to even to think to check if there is a shortened filing deadline when everything else mentions 31 January following.
If you're a decent tax consultant then of course you will have discussed all this with your overseas clients and planned the disposal beforehand, so late filing wouldn't happen...
Isn't there the old adage that no one knows the law until it is tested in Court and even then judges get it wrong which is why we have the higher Courts to set them right?
Having said that though it would be impossible to prove knowledge i.e. the absence of ignorance if you will.
In criminal law (sexual abuse) that rubicon has already been crossed and recently with one "recent arrival", a doctor I think, not realising and clearly not appreciating "cultural differences" as to how to treat female colleagues, I'd have banged him up.
This is a query after reading about whether ignorance of tax matters is reasonable. The circumstances surround a leaseholder owned management co. filing dormant accounts with no tax liability as the receipts belong to the registered owners, who are not aware of their liability.
The lease stipulates annual balancing of service charge and as freeholders the fixed estate charge and GR.
The flatowners think that the man.co. has the tax liability.
What I am saying would misunderstanding the implied meaning of the tax liability in the lease be excusable ?
Good article,it just sums up the law, very inconsistent and theres always one individual who is no better or worse than anyone else that really kops it, whilst others continue on by, totally unaware...or are they.
When all is said and done HMRC should apply a bit of common sense to penalties and more importantly to tax laws.
All this posturing by HMRC about people should know and understand tax rules is just rubbish when half their staff don't understand the rules themselves. I have a pile of tax books in my office which is about 18 inches high which represents tax law for 2017/18.
I suppose HMRC thinks that every taxpayer should have read and understood every page.
I have a surprise for HMRC and HMG most accountants need the assistance of tax specialists to understand this stuff and Joe Public wouldn't stand a chance in Hell of understanding it even if they could make it make sense.
It just goes to show how stupid HMRC and the legislators are, or, probably more likely, they are deliberately obfuscating matters so that penalties become the next stealth tax.
What we really need is a body, the Taxpayer's Alliance?, to scream and shout at the top of its voice so that the system is overhauled and made comprehensible to the man in the street.
As for MTD since the schools don't bother to educate people these days in anything but media studies it is a bit hard to see how Joe Public will cope with MTD. More penalties for HMRC I guess so that they can waste it on computer systems that don't work or throw it at the Sacred Cow, the NHS, where judging on my recent observations it will provide seats for nurses to use whilst drinking their coffee and ignoring the patients.
I am puzzled where the tribunals are going with this approach, and hope that the High Court eventaully takes a look at the issues.
Eg should the test also take account of illiterate and innumerate taxpayers? The days are long gone when they might have covered most of a large lump (sic) of taxpayers. But there are still many people who can't cope with even the simpler HMRC guidance notes.
And what about language? It seems arguable that A who does not understand written English has (with other factors) reasonable excuse while B who does understand it has (with the same other factors) no such excuse. That may not amount to a breach of the Equality Act but it seems to me at the very least controversial and - in the case of British nationals - a perverse incentive.
Latest case in taxpayer's favour is here:
http://financeandtax.decisions.tribunals.gov.uk/judgmentfiles/j11028/TC0...