Ignorance Of CGT Rules Is No Defence For Expat

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An expat appealing against a fine for failing to file a non-resident capital gains tax return was thrown out by a tribunal judge.

HM Revenue & Customs imposed a £400 fine on Barry Gilbert, a British expat living in Israel, after he sold a house in the UK but failed to tell the tax man the details within the 30-day deadline.

Instead, the tax return was filed seven months late.

The First-Tier Tax Tribunal accepted Gilbert had lived outside of the UK for at least 15 years and only returned for infrequent visits.

They also accepted that he had difficulties in accessing the internet from his home in Israel, which he argued left him unaware of changes in UK tax law posted online.

Reasonable excuse

Gilbert’s UK tax advisers, The Income Tax Return Service, also argued that the CGT law change for non-residents only impacted a few expats and was not widely publicised and HMRC had not directly notified him of the change.

HMRC explained that ignorance of the rules was not a reasonable excuse for filing a late CGT return and that he had an obligation to keep up-to-date with tax affairs in the UK that impacted on his finances.

The tribunal judge Charles Hellier pointed out that Gilbert’s ignorance of the law was the reason for his late return, but the question was does that amount to a reasonable excuse.

Appeal dismissed

“There was no evidence that Mr Gilbert had made any attempt to discover whether there had been any changes in the law. That is not to suggest that a reasonable taxpayer who gave reasonable priority to tax compliance in his position would have made daily enquiries, but they would have made some,” said the judge.

“Holding property in a jurisdiction exposes the owner to the rules of that jurisdiction, and I consider that the hypothetical reasonable taxpayer would have attempted some enquiries.”

The judge also stated that Gilbert could have borrowed someone else’s computer to check the HMRC web site about CGT for expats and was unreasonable to expect HMRC to write to him and every other taxpayer when rules that may impact them change.

The tribunal dismissed Gilbert’s appeal and the £400 penalty stands.

Read the full decision

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