Non-resident CGT reporting
When a person who doesn’t live in the UK sells a home located in the UK, the disposal must be reported to HMRC within 30 days of the completion date, using the online form for non-resident capital gains tax (NRCGT).
This deadline has been catching out many taxpayers and their advisers. Where the seller is not registered with HMRC, any NRCGT due on the gain must also be paid by the same date: 30 days after the completion of the deal. If the disposal is a gift between spouses, an NRCGT return is not required.
Where the seller is already registered with HMRC, they can opt to pay the NRCGT due as part of their regular tax return, on the normal due date for that tax return. However, in all cases a report of the sale must be made on an NRCGT return within 30 days of the conveyance, which is the date from which the property legally belongs to the new owner.
If the NRCGT return is not submitted on time, late filing penalties apply. These start at £100 for one day late, £300 when 6 months late, and a further £300 for a delay of 12 months. Where tax is payable on the gain, the penalties due at 6 and 12 months are calculated as the greater of 5% of the tax due and £300.
Example
Sandy has been resident in the USA for the last six years. She completed the contract to sell her UK property on 1 May 2016, so the NRCGT return was due by 31 May 2016. Sandy assumed that the gain had to be reported on her 2016/17 tax return, as she hadn’t heard of NRCGT. She told her accountant about the sale in June 2017, who immediately submitted the NRCGT return. However, by that point Sandy had racked up penalties of £700 for the 12 month delay in submitting the NRCGT.
The late filing penalties can be appealed, and may be cancelled if the taxpayer has a reasonable excuse, but ignorance of the law is not a reasonable excuse.