Capital Gains Tax (NRCGT) Returns
Non UK residents have only been in the scope of UK tax on the sale of residential property since April 2015. One of the requirements for non UK residents is that a non resident capital gains tax (NRCGT) return must be filed within 30 days of the sale. This is obviously new legislation but it is our experience that these returns are not always being made.
Recently there have been reports of HM Revenue and Customs (HMRC) issuing substantial penalties for the late submission of NRCGT returns, which people may be unaware of given the lack of targeted publicity by HMRC regarding such penalties.
HMRC must be informed of a disposal of residential property by a non resident individual, company, partner in a partnership or trustee within 30 days of the conveyance, using the online NRCGT return even if:
- There is no tax to pay.
- A loss has been made.
- The individual is registered for Self Assessment.
- The company is registered with HMRC for Corporation Tax.
- A HMRC Annual Tax on Enveloped Dwellings (ATED) or ATED-related Capital Gains Tax returns is submitted.
Any tax arising must also be paid within 30 days unless a self assessment tax return will be filed. In that case the due date for the payment of tax is the usual tax return filing deadline.
HMRC have confirmed that penalties for the late filing of an NRCGT return are in-line with late filing penalties for other types of return, with the amount of the penalty depending on the degree to which the return is late. Penalties are as follows:
- initial penalty of £100 in all cases;
- more than 6 months late, a further penalty of 5% of the tax due or £300 if greater;
- more than 12 months late, a further penalty of 5% of the tax due or £300 if greater.
HMRC also have the discretion to charge penalties of £10 per day for returns that are filed between 3 and 6 months late however they have recently stated that they will no longer issue such daily penalties for late NRCGT returns.
It should also be remembered that should any NRCGT be due to be paid within the 30 day period from disposal, late payment penalties and interest will charged if the deadline is missed.
Any NRCGT remaining unpaid after 31 January following the end of the tax year of disposal will result in a late payment penalty being charged of 5% of the tax outstanding.
If you would like any further information or advice in connection with the above, please contact our Tax Director, Jenny Marks.
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