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January 11, 2018

New Rulings Cast Doubt on NRCGT Penalties

In the case of McGreevy [2017], the First-Tier Tribunal held that ignorance of the law in respect of the requirement to file a Non-Resident Capital Gains Tax (NRCGT) Return within 30 days of compliance was a reasonable excuse.

In the judgement, the tribunal judge was highly critical of HMRC’s efforts in publicising the new requirements to taxpayers and ultimately used their discretion to reduce the taxpayer’s penalties to zero. Please see our blog for further details on the case.

However, the judge in the recent cases of Hesketh [2017] and Welland [2017]  has rejected the ruling in McGreevy and held that ignorance of the 30-day deadline is not a reasonable excuse. The judge ruled in favour of HMRC in both cases on the basis that its failure to more widely publicise the change in law or to warn taxpayers of the changes cannot amount to a reasonable excuse.

These rulings cast doubt on the notion that being unaware of the requirement to file a NRCGT return can amount to a reasonable excuse for the purposes of appealing penalties. In Welland, the judge noted that it would be advantageous if the Upper Tribunal were to make a binding ruling on the matter so as to avoid future inconsistencies.

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