How to fight a Non Resident Capital Gains Tax penalty

March 20, 2018


If you live abroad and have a UK residential property you wish to sell, you will now be subject to paying Non Resident Capital Gains Tax (NRCGT) on any profit realised on the sale.  However, this has not always been the case and prior to 6 April 2015 you would not have had to pay tax on any such gains made.  As a concession therefore, where a property has been owned since before 6 April 2015, tax will only be due on subsequent increases in value, making it important to get a valuation of the property at that date.


A gain or loss made by a non-resident owner must be reported within 30 days of the completion of the contract by submitting a NRCGT return online to HMRC.   This return must be completed, even if the taxpayer already submits a UK self-assessment tax return, which would also provide details of this transaction.


If the property was historically the taxpayer’s main residence, gains may still be liable for tax relief, resulting in tax not being due.  But even so, the NRCGT return still needs to be registered within the 30 days.


It is this tight 30 day deadline and the fact that a return is required regardless of any self-assessment filings or even if tax is not due, that has been missed by many taxpayers.  If the NRCGT return is late, the late filing penalties will apply and can easily mount up to £1,300, often before the taxpayer even becomes aware of their commitment to file the forms reporting the sale. However, should you have received a penalty for the non-return of the NRCGT form, it may be possible to challenge it.


A recent case was ruled that the HMRC had not made a reasonable effort to inform taxpayers, or tax agents about the change in the new filing deadlines.  Posting the information on the HMRC's website on 6 April 2015 was not deemed to be sufficient and it was stated that it was not reasonable to expect the taxpayer to read an obscure publication to gain information on the NRCGT form. HMRC have also indicated that they are taking a more considered approach to the daily penalties of £10 a day which begin 3 months after the normal deadline for filing.


Should you have received a penalty for late filing, Everfair Tax would be happy to assist you with considering if it would be worth appealing and we have helped many clients to do so successfully.


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