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Appealing a CGT 60-Day Reporting Penalty: A Guide for Property Sellers

Missed the 60-day deadline to report CGT on a UK residential property sale? Here is the penalty stack you are facing, the four ways to appeal it, and a candid read on your prospects.

Liam Williams

Liam Williams

— 15 min read
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You sold a UK home or buy-to-let. The solicitor sorted the SDLT for the buyer but never mentioned your capital gains tax. Sixty days came and went. Now HMRC has sent a penalty—and possibly a stack of them.

The 60-day in-year reporting rule for residential property gains is one of the least-publicised obligations in UK tax. The first many sellers hear of it is the £100 penalty letter that lands six or twelve months after completion.

This guide explains what you are actually appealing, the four routes available, and why—post-Perrin—your position in 2026 is stronger than the first wave of appellants caught by the same regime.

The 60-Day Rule (And When It Applies To You)

The reporting obligation sits in Schedule 2 to the Finance Act 2019. If you are a UK resident and you dispose of UK residential property at a chargeable gain, you must file a standalone return and make a payment on account of the CGT within the statutory window. Non-residents must file even where no tax is due.

Disposals From 27 October 2021: 60 Days

The current window is 60 days from completion, extended from 30 days by section 23 of the Finance Act 2022. You file through HMRC's CGT on UK Property Account, set up via your Government Gateway login. The same window applies to the payment on account.

If your disposal completed between 6 April 2020 and 26 October 2021, the window was 30 days, not 60. Penalty appeals from that early period are still being heard.

When You Don't Need To File

Two carve-outs in Schedule 2 are commonly misunderstood:

Paragraph 4—no payment on account due (UK residents only). If the gain is wholly absorbed by losses, the £3,000 annual exempt amount (from 6 April 2024), or a relief such as private residence relief, no payment on account is required and the return obligation falls away. Non-residents must file even where no tax is due. If PRR covers part but not all of the gain, the obligation revives—a former main residence with a period of letting usually still requires a return.

Paragraph 5—self assessment return filed first. If you have already delivered your ordinary self assessment return for the tax year of disposal before the 60-day deadline expires, the standalone return obligation falls away. This commonly applies where exchange and completion straddle two tax years, or where the seller is an early SA filer.

If neither carve-out applies, the return is due—and the Schedule 55 penalty machinery is waiting.

The Penalty Stack

CGT-60 penalties come from two separate schedules. Reading the letter carefully will tell you which you are facing.

What The Penalty Letter Looks Like

HMRC issues each penalty as a separate notice with its own reference number and its own 30-day appeal window. You may receive one letter, or three at different times:

  • First notice (£100)—usually arrives six to twelve weeks after the deadline.
  • Second notice (6-month, £300 or 5%)—about six months after the deadline if you still have not filed.
  • Third notice (12-month, £300 or 5%)—about a year after the deadline.

Each notice states the penalty type ("failure to file"), the period it covers, the amount, the assessment reference, and where to send your appeal. Appealing the £100 does not protect you against the £300 that arrives later—each notice must be appealed separately within 30 days of its own issue date. If the late-payment Schedule 56 penalty arrives, it comes on its own assessment notice with its own reference (see the timing section below).

Working Out The Tax At Stake

To know whether the 6-month and 12-month penalties will be the £300 floor or the 5% percentage, you need to estimate your CGT. For disposals on or after 30 October 2024, residential property gains are taxed at 18% (basic-rate band) or 24% (higher-rate band). Before that date the higher rate was 28%. The annual exempt amount for individuals is £3,000 from 6 April 2024 (was £6,000 in 2023-24, £12,300 before that). Trustees get half.

A worked example. You sell a former buy-to-let for £400,000 (cost £250,000, no improvements, no period of main-home use). Gross gain is £150,000. After the £3,000 AEA, £147,000 is chargeable. At 24% that is £35,280 of CGT. Five per cent of that is £1,764—well above the £300 floor. The 6-month and 12-month penalties would each be £1,764, not £300.

Late-Filing Penalties (Schedule 55)

The 60-day return is Table item 2A in Schedule 55 of the Finance Act 2009, plugged into the same architecture as late-filing penalties under Schedule 55 for income tax. The cascade is:

Stage Penalty Statutory anchor
Day after deadline £100 Sch 55 para 3
6 months late Greater of £300 or 5% of tax due Sch 55 para 5
12 months late Greater of £300 or 5% of tax due (more for deliberate) Sch 55 para 6

There is also a daily penalty of £10 per day for up to 90 days under Schedule 55 paragraph 4. In practice, HMRC does not charge paragraph 4 daily penalties on CGT-60 returns—the administrative withdrawal recorded in Bradshaw (see below) for the predecessor NRCGT regime has been carried into the Schedule 2 FA 2019 regime. If a genuine daily penalty notice appears, scrutinise it under the Donaldson test (see Route 2).

The 12-month penalty can rise above 5% where HMRC categorises the failure as deliberate. For most ordinary "I didn't know" cases the non-deliberate band applies, but behaviour escalation is possible.

Late-Payment Penalties (Schedule 56)—The Timing Trap

The CGT itself is also subject to late-payment penalties under Schedule 56 of the Finance Act 2009 (Table item 3B). The 5%/5%/5% escalator in paragraph 3 charges:

  • 5% of the unpaid tax at the penalty date
  • A further 5% if still unpaid after 5 months
  • A further 5% if still unpaid after 11 months

The counter-intuitive part is the timing. The Schedule 56 "due date" for CGT-60 is not day 61 after completion—it is 30 days after 31 January following the tax year of disposal. The penalty date is one day later.

Worked example. You sell on 1 May 2024 (tax year 2024-25). Your 60-day filing and payment deadline is 30 June 2024. But the Schedule 56 due date is 30 days after 31 January 2026—2 March 2026. The first 5% late-payment penalty does not bite until 3 March 2026; the second in early August 2026; the third in early February 2027.

You can receive a £100 late-filing penalty in 2024 while the late-payment penalty stack is still nearly two years away. Any practitioner article saying "5% bites at day 31" is talking about the new FA 2021 regime—not the regime that applies to CGT-60.

Interest Is Separate (And Runs From Day 61)

Interest is not a penalty. It runs under section 101 of the Finance Act 2009 on a daily simple basis from the day after the 60-day payment deadline. The current late-payment rate is 7.75%—base rate plus 4%.

So while the Schedule 56 penalty timeline gives you a long runway, interest accrues from day 61. On a CGT bill of £30,000 that is roughly £6.50 per day. There is no reasonable excuse defence to interest. For the full picture, see our guide to interest on unpaid tax.

Why The New FA 2021 Regime Does Not Apply Here

You may have read about the new points-based regime under Schedules 24 and 26 of the Finance Act 2021. It does not apply to CGT-60 returns. The new regime is being rolled out for VAT (live since January 2023) and for income tax self assessment under MTD (£50,000 threshold from April 2026). The CGT-on-UK-property return remains on the old Schedule 55/56 machinery. The new regime has a 15-day grace period before late-payment penalties bite; the old regime does not.

The Four Routes To Appeal

There are only four legal grounds on which the First-tier Tribunal can allow your appeal. Hok Ltd v HMRC [2012] UKUT 363 (TCC) confirmed that the tribunal has no general fairness or equitable jurisdiction. You must fit your appeal into one of these four routes.

Route 1: The Return Wasn't Due

If paragraph 4 or paragraph 5 of Schedule 2 FA 2019 applied to you, the return was not due at all—and Schedule 55 cannot impose a penalty for failing to file a return that did not exist.

Common scenarios:

  • The disposal generated no chargeable gain because private residence relief covered the whole period of ownership.
  • The gain was within the £3,000 annual exempt amount or covered by losses.
  • You had already filed your self assessment return for the year of disposal before the 60-day deadline expired.

If any of these apply, gather the evidence (completion statement, calculation of the gain, your SA return filing receipt) and write to HMRC explaining that the return obligation never arose. This is the strongest of the four routes because it does not depend on persuading HMRC of anything—it is a question of statutory construction.

Route 2: The Penalty Notice Is Procedurally Invalid (Donaldson)

In Donaldson v HMRC [2016] EWCA Civ 761, the Court of Appeal held that Schedule 55 paragraph 4(1)(c) requires HMRC to give the taxpayer notice specifying the date from which daily penalties run. For CGT-60 returns there is no SA reminder or SA326D, and HMRC does not in practice charge daily penalties. If you receive what is labelled a daily-penalty assessment, examine the notice carefully. The same point applied in Heacham Holidays Ltd v HMRC [2020] UKFTT 406 (TC), where an ATED daily-penalty assessment was struck down for failing to meet paragraph 4(1)(c). Same statute; same principle. Narrow but real.

Route 3: Reasonable Excuse (Sch 55 Para 23)

Schedule 55 paragraph 23 provides a reasonable excuse defence. If you satisfy HMRC—or the tribunal on appeal—that you had a reasonable excuse for the failure, no penalty arises. The same defence is built into Schedule 56 paragraph 16 for late-payment penalties.

Three statutory carve-outs apply: insufficiency of funds is not a reasonable excuse unless attributable to events outside your control; reliance on another person is not a reasonable excuse unless you took reasonable care to avoid the failure; and a reasonable excuse that has ceased is treated as continuing if the failure is remedied without unreasonable delay.

This is the most-used route for CGT-60 appeals.

Route 4: Special Circumstances (Sch 55 Para 16)

Schedule 55 paragraph 16 gives HMRC discretion to reduce a penalty if "special circumstances" justify it (ability to pay is excluded). This is a weaker route in practice: the tribunal cannot substitute its own view and can only set HMRC's decision aside if "flawed" in the judicial-review sense. But it is worth pleading in the alternative. A reasonable-excuse argument focused on personal hardship, bereavement, or HMRC error frequently doubles as a paragraph 16 argument.

Reasonable Excuse In Practice

Most unrepresented CGT-60 appeals turn on reasonable excuse. Here is how to think about it.

The Perrin Four-Step Test

The Upper Tribunal in Perrin v HMRC [2018] UKUT 156 (TCC) set out the binding four-step test at paragraph 81: (1) identify the facts asserted; (2) decide which are proven; (3) decide whether, viewed objectively, those facts amount to a reasonable excuse; (4) consider when any excuse ceased and whether the failure was remedied without unreasonable delay.

Step three decides most cases. The test is objective—what would a responsible person in your position have done?—but takes your actual situation, knowledge, and experience into account. Honest belief alone is not enough; a reasonable mistake by someone in your position can be.

"I Didn't Know": The NRCGT Case-Law Split

There is no reported decision specifically on the post-2020 UK-resident 60-day regime yet. The closest analogous body of case-law is the non-resident CGT (NRCGT) line from 2017-2019, decided under the predecessor 30-day rule in section 12ZB TMA 1970. The same Schedule 55 machinery and the same reasonable-excuse framework apply.

The FTT split into two camps. The pro-taxpayer line held that ignorance of a new, poorly-publicised in-year obligation could be a reasonable excuse: McGreevy v HMRC [2017] UKFTT 690 (TC) (Thomas J, regime complex and HMRC had not notified non-resident landlords); Saunders v HMRC [2017] UKFTT 765 (TC) (Connell J, £1,300 penalties discharged); Bradshaw & Anor v HMRC [2018] UKFTT 368 (TC) (Thomas J reaffirming McGreevy post-Perrin, recording HMRC's withdrawal of daily penalties); Kirsopp & Anor v HMRC [2019] UKFTT 217 (TC) (Hellier J, taxpayers in correspondence with HMRC's Centre for Non-Residents but never told of the new regime).

The pro-HMRC line: Welland v HMRC [2017] UKFTT 870 (TC) (Mosedale J, regime not complex, helpline available); Hesketh v HMRC [2017] UKFTT 871 (TC), decided alongside Welland, containing the much-cited line that ignorance of basic law is not a reasonable excuse.

Why Your Position In 2026 Is Stronger Than In 2017

Perrin paragraph 82 binds the FTT: "It will be a matter of judgment for the FTT in each case whether it was objectively reasonable for the particular taxpayer, in the circumstances of the case, to have been ignorant of the requirement in question, and for how long." The binary "ignorance is no excuse" position is no longer tenable. In Jacques v HMRC [2020] UKFTT 311 (TC), Judge Redston narrowed Hesketh to stand only for the proposition that HMRC has no statutory duty to notify a specific taxpayer of new legislation.

The publicity picture for the UK-resident regime has been patchy. Conveyancers routinely complete transactions without mentioning the seller's CGT. The CGT on UK Property Account is set up through Government Gateway and is invisible unless you know to look for it. HMRC has ramped up nudge letters, so the publicity argument weakens each year. A first-time seller in 2026 still has a respectable argument; in 2030 the same argument will be harder.

The Adviser-Reliance Trap (Heacham, Sch 55 Para 23(2)(b))

Many sellers think their solicitor or conveyancer was dealing with the tax. They were not. Conveyancers handle the buyer's SDLT—they do not usually advise on the seller's CGT.

Schedule 55 paragraph 23(2)(b) provides that reliance on another person is not a reasonable excuse "unless P took reasonable care to avoid the failure". The FTT applied this strictly in Heacham Holidays Ltd v HMRC [2020] UKFTT 406 (TC) (an ATED case): the failure of the adviser to file on time was a matter between the adviser and the client, not a reasonable excuse against HMRC.

Reliance is more likely to succeed where you instructed the adviser specifically to handle the CGT reporting (not just the conveyancing), the adviser held themselves out as taking it on, and you took reasonable care to check what they had done. It is unlikely to succeed where the adviser was a conveyancer with no tax remit, you assumed SDLT and CGT were both "the solicitor's job", and you did not check until HMRC's penalty letter arrived. Be candid about what you instructed and what you checked—a well-evidenced "I asked them to deal with it, they confirmed, and I followed up" argument has a chance; a vague "I thought they were dealing with everything" usually does not.

If You Can't Pay The Tax: Time To Pay

For many sellers the CGT bill is large and the cash has already been spent—reinvested in a new property, or used to pay down the mortgage on completion. The Schedule 56 escalator and the 7.75% interest charge can compound quickly.

The route to avoid Schedule 56 penalties for genuine cashflow problems is Time to Pay. Insufficiency of funds is not by itself a reasonable excuse, and a generic "I told HMRC I couldn't pay" will not work either. In Wragg v HMRC [2024] UKFTT 1012 (TC)—a share-sale case, but the same principle applies to any CGT bill—Mr Wragg's share-sale proceeds were tied up while the company sold a commercial property, and the property sale slipped past his CGT due date. His agent contacted HMRC to explain, was directed to the Gov.uk payment-problems link, but never formally applied for Time to Pay. The tribunal dismissed his appeal: insufficiency of funds was not a reasonable excuse where the share-sale terms were within his control, and a phone call is not a Time to Pay application. File the return on time, then immediately apply for Time to Pay through HMRC's Business Payment Support Service—a formal arrangement, accepted in writing, suspends penalty accrual. See our guide to Time to Pay and postponement.

How To Appeal: The Procedural Route

Step 1: File the late return immediately. Doing so stops the Schedule 55 paragraph 5 and paragraph 6 clocks—both tax-geared and easily larger than the £100 fixed penalty. File before the 6-month point and you avoid the bigger penalties entirely; file before 12 months and you cap the cascade at the 6-month figure. Filing the return does not waive your right to appeal the penalties already issued.

Step 2: Appeal the penalty within 30 days. Write to the address on the notice, citing the penalty reference and setting out your grounds. No fee at this stage. If the 30 days has already expired, see our guide to late appeals—the tribunal applies a strict three-stage Martland test, and the longer you wait, the harder it becomes.

Step 3: Ask for statutory review. A different HMRC officer takes a fresh look within 45 days. Around 56% of reviewed decisions are cancelled or varied in the taxpayer's favour, and around 75% of disputes settle at this stage without going to tribunal. Reviewers can—and do—accept reasonable excuse arguments that an officer at first instance has refused.

Step 4: If the review confirms, appeal to the tribunal. You have a further 30 days from the review conclusion letter to notify the First-tier Tribunal (Tax Chamber). The appeal fee is £0. File online or by post using Form T240—see our step-by-step guide. Cases typically take typically 6-12 months to resolve.

What Your Appeal Letter Should Say

Use the structure from our guide to writing grounds of appeal. For a CGT-60 reasonable-excuse appeal, the letter should: identify the penalty (reference number, date, amount); state the disposal (completion date, type of property, brief calculation of any gain); set out the route(s) in the alternative ("First, the return was not due; in the alternative, reasonable excuse; in the further alternative, paragraph 16 special circumstances"); tell the Perrin story honestly—what you knew, what you did, when; address the carve-outs if relying on a third party or pleading insufficiency of funds; reserve the procedural validity point if a daily-penalty notice is in the mix; and ask for statutory review. Two pages with documents attached is usually enough.

What To Bring To A Tribunal Hearing

If the appeal reaches a hearing, the tribunal will want: the completion statement, your CGT calculation, the penalty notice(s) and HMRC's view of the matter letter, the statutory review conclusion, any correspondence with your solicitor or conveyancer on CGT, and a short signed witness statement explaining what you knew, when, and what you did. If insufficiency of funds is in issue, add bank statements and evidence of any TTP application.

Most CGT-60 penalty appeals are allocated to the Default Paper or Basic category—often no formal hearing, modest costs risk, each side bearing their own costs. See our guide to tribunal tracks and costs.

A Candid Read On Your Prospects

The published FTT case-law on ignorance-as-reasonable-excuse in this regime splits roughly evenly. The pro-taxpayer line (McGreevy, Saunders, Bradshaw, Kirsopp) is stronger post-Perrin than when those cases were decided. The pro-HMRC line (Welland, Hesketh) has been narrowed. HMRC's review stage allows a substantially higher proportion of these appeals than the FTT does—most unrepresented appellants benefit more from a well-prepared review submission than from a tribunal hearing.

What helps: filing the late return immediately; telling the story honestly with evidence; pleading routes in the alternative; engaging properly with statutory review. What hurts: claiming the solicitor was dealing with it without evidence of any tax instruction; treating "I didn't know" as the entire argument; waiting until the 12-month penalty has issued before doing anything.

The 60-day rule is badly publicised. The case-law acknowledges that. Post-Perrin, the answer is to set out the facts and let the tribunal judge whether your ignorance was objectively reasonable—not to assume it.

Where To Get Help

If you cannot afford professional advice on a £100–£3,000 penalty, several charities help unrepresented taxpayers free of charge:

  • TaxAid (taxaid.org.uk)—free tax help for taxpayers on low incomes who cannot afford a professional adviser.
  • Tax Help for Older People (taxvol.org.uk)—free help for over-60s on modest incomes.
  • Low Incomes Tax Reform Group (LITRG) (litrg.org.uk)—plain-English guidance on CGT and on appealing penalties.
  • Citizens Advice (citizensadvice.org.uk)—general signposting and form-completion help.

If you have a health condition or other circumstance that makes dealing with HMRC harder, ask for HMRC's Extra Support Team—a dedicated unit that handles vulnerable taxpayers' affairs.

If your case is genuinely complex (multiple disposals, trusts, non-resident issues, large CGT bill), a Chartered Tax Adviser, enrolled tax solicitor, or accountant can be engaged for the appeal stage only without committing you to ongoing fees.

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This article is for informational purposes only and does not constitute legal or tax advice. For advice specific to your situation, consult a qualified tax adviser, accountant, or solicitor.

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