Principal Private Residence ("PPR") relief is one of the more widely known tax reliefs and can exempt an individual from capital gains tax ("CGT") on the sale of their home. The level of PPR relief available is calculated by reference to the “period of ownership” and the “period of occupation” on a pro rata basis. With this in mind, where an individual has lived in their home as their main residence throughout the period of ownership, then a liability to CGT should not arise on a sale. In HMRC v Higgins (2018), the Upper Tribunal considered when the period of ownership commenced for an off-plan purchase of an apartment. The UT reversed the First-Tier Tribunal’s decision and held that the period of ownership started from t...

Since the introduction of the requirement to file a Non-Resident Capital Gains Tax (“NRCGT”) return on the disposal of UK property, several cases have been brought against HMRC at Tribunal where taxpayers (unaware of their compliance requirements) have failed to file a NRCGT return on time. The cases have all concerned whether the taxpayer’s ignorance of the law amounts to a reasonable excuse for not filing a return by the deadline. (Further information regarding the requirements of non-UK residents on selling UK residential property can be found here). In the latest two cases Gater v HMRC (2018) and Wickenden v HMRC (2018), Judge Thomas and Judge Beare respectively ruled in favour of the taxpayer. Judge Thomas has rule...

In our previous blog NRCGT & Ignorance of the Law – Where are we now? (2 July 2018), we set out a series of cases where various judges came to differing conclusions over whether ignorance of the law was a reasonable excuse for failing to file a Non-Resident Capital Gains Tax (“NRCGT”) return on the disposal of UK property by the due date. (Further information regarding the requirements of non-UK residents on selling UK residential property can be found here). Since the publication of our last blog, Judge Thomas has ruled on a further case and reinforced his position that ignorance of the law can be a reasonable excuse for failure to submit a NRCGT return, thereby allowing a taxpayer’s appeal against HMRC’s penalty. In...

The First Tier Tribunal ("FTT") has found that HMRC’s application Extra Statutory Concession ("ESC") D49 is incorrect, and has suggested that guidance should be revised to reflect the "true position". The decision would provide a more robust application of tax relief to the period before moving into a property that is an individuals main residence, where the relevant conditions are met. Background Principal Private Residence Relief ("PPR") provides relief to individuals from capital gains tax ("CGT") where they dispose of a dwelling house which is used as their only or main residence. The rules of the relief also provide for deemed periods of residence. In addition to these rules, HMRC can apply ESC D49 which provides additional ...

The Sunday Times has reported that HM Revenue & Customs are set to investigate individuals who they believe may have sold a second home and/or rental property but did not report any capital gains tax ("CGT") on their tax returns. Letters will be sent to 1,500 individuals that HMRC has identified as having sold property during the 2015/16 without declaring a CGT liability. The letters will invite taxpayers to explain why they haven't paid the CGT that HMRC’s computer models suggest they may owe.  Failure to reply could result in a formal investigation and increased penalties. If you have any doubts about your tax affairs, then you should speak to a tax professional to ensure you are complying with the law. If you have undi...

The government has recently published a draft of the Finance Bill 2018-19, containing measures that will form a part of the next Finance Bill. Consultation of the draft legislation will run until 31 August 2018, following which the final contents of the Finance Bill 2018/19 will be confirmed in the Autumn Budget 2018. A round-up of some of the key measures is provided below. Increase in Time Limits for Offshore Non-Compliance The current periods that HMRC are able to assess for both on and offshore non-compliance are 4, 6, and 20 years depending upon behaviour - 4 years where the taxpayer took reasonable care, 6 years where a loss of tax has arisen through careless behaviour, and 20 years where a tax loss has arisen through deliberate...

As discussed in our previous blog, New Rulings Cast Doubt of NRCGT Penalties (January 2018), taxpayers have been receiving mixed results from Tribunal cases with regards to penalties for the late filing of NRCGT tax returns. Previous Cases All these cases involved a non-UK resident who disposed of UK property and failed to complete the Non-Resident Capital Gains Tax ("NRCGT") return within the 30-day deadline. The taxpayers claimed that they were unaware of the requirement to file the return, and that this was a reasonable excuse for failing to comply with the legislation. HMRC contended that ignorance of the law cannot be a reasonable excuse, and that taxpayers have an obligation to stay up-to-date with tax legislation. Firs...

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...

On 22 November 2017, the Chancellor of the Exchequer published the Autumn Budget 2017 – the second budget of the year. Here are the highlights: Individuals Personal Tax Rates Personal allowance will rise from £11,500 to £11,850, from 2018/19 The basic rate threshold will be increased to £34,500, from 2018/19. Pension lifetime allowance will rise to £1,030,000, from 2018/19. Annual exemption for capital gains tax (CGT) will rise to £11,700, from 2018/19. From 29 November 2017, marriage allowance transfer claims can be made on behalf of deceased spouses, and backdated for up to 4 years. Stamp Duty Land Tax (SDLT) Effective from 22 November 2017, SDLT will be abolished on homes under £300,000 for first-time ...

In the recent case of McGreevy v HMRC, the First Tier Tribunal judge found in favour of the taxpayer, who was held to have a reasonable excuse for not filing their Non Resident Capital Gains Tax (NRCGT) Return within the 30 day deadline. HMRC will allow a taxpayer to appeal a penalty where they have a reasonable excuse, however the requirements that must be met in order for an excuse to be considered reasonable can be stringent. The ruling represents a common sense approach to determining what is a reasonable excuse. Background Where an individual is not a resident in the UK, and disposes of a UK residential property, the disposal must be reported to HMRC on NRCGT Return within 30 days of conveyance. Any tax due is payable by the s...