Penalties: Capital Gains Tax

What tax penalties apply for late filing Capital Gains Tax (CGT) returns or payment of tax? There are special tax filing and obligations in respect of reporting capital gains made on the disposal of different types of asset.

This is a freeview 'At a glance' guide.

Tax penalties: at a glance

Capital Gains Tax online property return for residential property disposals (from April 2020)

Deadlines: after disposal date:

• 60 days if the completion date was on or after 27 October 2021
• 30 days if the completion date was between 6 April 2020 and 26 October 2021

A new points-based regime will apply from April 2023. See Penalties: points based late submission regime

Penalty is based on behaviour:

• deliberate and concealed withholding 100% of tax due, or £300 if greater.
• deliberate but not concealed 70% of tax due, or £300 if greater.

Reductions apply for prompted and unprompted disclosures and telling, giving and helping.

Self Assessment & Capital Gains Tax (CGT) returns.

Annual tax returns, long or short plus supplementary pages.

Filing deadlines: following the end of the year of assessment:

• On paper: 31 October.
• Electronically: 31 January.

Filing obligations and deadlines: at a glance

Capital Gains made on UK residential property disposals, including gains made by Non-Resident taxpayers of indirect disposals of interests in a 'UK property rich' entity must be declared on HMRC's online CGT disposal return , and the tax paid, using the Capital Gains Tax UK property disposal service, within:

• 60 days if the completion date was on or after 27 October 2021.
• 30 days if the completion date was between 6 April 2020 and 26 October 2021

Other Capital Gains and also reportable residential property gains are both reported under Self Assessment on or before 31 January following the year of assessment.

This means that there may well be up to two filing obligations and two tax payments, where a balancing payment is due under Self Assessment

Further penalties

A tax geared penalty 0% to 100% based on behaviour and cooperation.

From 1 April 2017: Potential asset-based penalty if an error is deliberate and offshore and potential lost revenue is £25,000 or more.

Maximum penalties are increased by 50% or 100% if the error relates to a country that has been grey or blacklisted.

For correction of errors with an offshore element occurring on or before 5 April 2017. The deadline is 30 September 2018.

If corrected on time, penalties as actual failure above. Failure to correct penalties start at 200% of the offshore potential lost revenue and cannot be less than 100%. No mitigation for severity.

Late payment: Time to pay agreements

If the taxpayer makes a Time to pay agreement with HMRC the penalty is suspended.

• The taxpayer will become liable to the penalty if the suspension agreement is broken.

Appeal

• The taxpayer has 30 days to lodge an appeal with HMRC against a tax penalty. This was extended by three months for COVID-19 related delays for the 2019-20 tax year.
• A Late appeal may be accepted at the discretion of HMRC or the tribunal judge.

The legislation relevant to each type of penalty provides for the appeal process and it is advisable first off to ensure that any penalty charged has been made correctly according to the legislation.

HMRC will not challenge any late filing penalty appeal provided that there is a Reasonable excuse for late filing and that an appeal has been made.

Appealing a penalty can be far from straightforward as there are numerous grounds for appeal and technical arguments that can assist the taxpayer.

• See How to appeal a tax penalty (subscriber version) or
• How to appeal a tax penalty (freeview).

Special reduction

• Upon appeal, HMRC has a statutory requirement to consider whether any special circumstances exist and if so it may override the statutory penalties and reduce them as it sees fit. See Appeals: Grounds for Appeal Toolkit

Further information

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