From April 2019, non-resident capital gains tax extends to non-residential UK property and substantial interests in UK property-rich entities. Given the number of people who have failed to submit NRCGT returns since the regime was introduced for residential property in 2015, this should set alarm bells ringing.

The compliance problem

Where a non-UK resident sells UK residential property, an NRCGT return must be submitted to HMRC within 30 days of completion — whether or not there is any tax to pay. Despite this requirement being in force since April 2015, many non-residents have failed to file returns at all. The reasons are understandable: HMRC has not publicised the obligation overseas, and many conveyancers have also failed to advise their clients of it.

Can ignorance of the law be a defence?

Some non-residents have successfully appealed HMRC penalties on the basis that ignorance of the law was a reasonable excuse. However, more appeals have failed than succeeded. The chances of escaping penalties on this basis are slim, and the potential costs are significant — late filing penalties start at £100 for 30 days and can escalate substantially, with daily penalties of up to £900 possible once a return is more than 12 months overdue.

What to do

If you are a non-UK resident who owns UK property or shares in a property-rich company, please take advice before any disposal to ensure you understand your reporting obligations and the relevant deadlines. Please contact us to discuss your circumstances.