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seanferguson13
seanferguson13, Solicitor
Category: Law
Satisfied Customers: 31
Experience:  3 year qualified solicitor with expertise in UK taxation.
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Can a British Tax Payer buy and sell a property in Portugal,

Customer Question

Can a British Tax Payer buy and sell a property in Portugal, as an agent or in trust for another non-British person or BVI company, removing the tax liability from themselves and onto the beneficiary?

Submitted: 2 years ago.
Category: Law
Expert:  seanferguson13 replied 2 years ago.
seanferguson13 : Hi there
seanferguson13 : the answer is yes as agent but no as trustee. You will be legally liable for any tax on the property by the UK and Portuguese authorities, however you could obtain a covenant from the beneficiaries in the trust deed that indemnifies you for such payments of tax (in fact this is a standard clause to include). You would remain legally on the hook but you would have recourse against the trust's beneficiaries.
seanferguson13 : Does that answer your question?
Customer:

Hi

seanferguson13 :

What additional questions do you have?

Customer:

Hello Sean... Sorry I was cut off.

Customer:

My further question is that if I have an appointment as an agent and an attorney to the client to buy and sell the property in portugal then I should not be liable for the tax on the benefit

Customer:

The only thing is that I did not decalre the arrangement to the land registry at the time of purchase or sale, I only brought the arrangement up when it came to the tax return upon the sale of the property

Customer:

I have presented the documents as follows

seanferguson13 :

"My further question is that if I have an appointment as an agent and an attorney to the client to buy and sell the property in portugal then I should not be liable for the tax on the benefit" - This is correct. Assuming you are not acting as "principal" or on your own account.

Customer:

1- appointment as agent/trustee and attorney/ the bank transfer of funds from the company i was representing 3- the sale of the property and the proceeds back to the company and not me

seanferguson13 :

Are you talking about the UK Land Registry or the Poruguese Land Registry?

Customer:

The Portuguese authorities are not accepting my documents as there was no mention of the arrangement at the time of purchase or sale, and the purchase was made in my name.... this is quite different to the UK tax laws that recognises trust documents and agents as nominees even if they are not registered as such in land registry

Customer:

Portuguese

seanferguson13 :

I agree - unfortunately I can only advise you on UK law.

seanferguson13 :

So do you mean the the tax authorities in Portugal or the land registry in Portgual aren't accepting your documents?

Customer:

The portuguese are chasing me for a tax is that is not mine and not accepting the arrangement I had with the company that i was representing, ...

Customer:

yes the tax authorities are are not accepting my documents

Customer:

even though I'm happy to act as an agent between them and the company to retrieve the tax accordingly

seanferguson13 :

From an English law perspective it would appear you are acting as agent, but from a Portuguese perspective I really wouldn't know.

Customer:

My argument is if the liability is not mine (as per the arrangement and appointment) then why should I be liable?... the tax should be paid by the company

seanferguson13 :

I understand, but the tax law in the UK and the tax law in Portugal are two entirely separate things.

Customer:

its the UK HMRC acting for Portugal under MARD that are chasing me

seanferguson13 :

and how is it that they are not "accepting" your documents - what have they said?

Customer:

but not under my tax return or tax ID in the UK

Customer:

They have said that if Portugal is not accepting your case then we will collect from you

Customer:

and they will make an order of possession of goods if I do not pay

Customer:

clearly the UK should accept fair play

seanferguson13 :

You really need to ascertain the position under Portuguese law

Customer:

if I was liable for the tax then I should've made such a declaration on my tax return

seanferguson13 :

What about the person you were acting for - can you not obtain the tax from them to pay over?

seanferguson13 :

But it is your contention that you are not liable - so that is a circular argument.

Customer:

yes I can get a form of liability from them... however I would need Portugal to agree and recognise such a form

Customer:

yes its a circular argument

seanferguson13 :

Can you just obtain the actual money from them and just pay it over

Customer:

if i obtain the money then I am admitting that the transaction was mine and I benefitted when in fact I did not

Customer:

and secondly it would make my tax return for that year in the UK false

Customer:

this is a two part argument

Customer:

1. the liability is not mine

Customer:

2. the liability should be paid by the company

seanferguson13 :

Yes, but at the end of the day they just want their money - they are the same as any other person/business in that regard. If you obtain the money from the principal and say "without prejudice" to your position you are paying tax on behalf of your principal - then I'm 99% certain they will accept that

seanferguson13 :

Check with HMRC but I would present that to them as a reasonable way forward

seanferguson13 :

Who are you dealing with there? Which team?

Customer:

I agree with you however it will require for the Portuguese to accept that i am receiving the tax money from the company and the HMRC to acknowledge without prejudice that I am acting as an agent in this transaction and the payment of the liability

seanferguson13 :

Yes - but im sure HMRC can agree that on their behalf

Customer:

A team out of Lagos

Customer:

the Taxation office of Lagos

seanferguson13 :

A hmrc team in lagos?

Customer:

no HMRC MARD in Bradford

Customer:

and the local taxation office in Lagos

seanferguson13 :

If HMRC are getting involved then communicate with them in the first instance. Write them a letter and state your proposal, make sure the letter is marked "without prejudice" and send it special delivery. Ask for a response within 5 working days. If they cannot or will not agree to propose the position to the Portuguese then make the same offer direct to the Portuguese local tax office. I would say at the bottom something like "Should you not accept this offer then I do not see any other option but to commence litigation."

Customer:

Can I make a petition in the courts in Portugal to have the liability moved from me too the company I was representing ?

seanferguson13 :

That is a Portuguese question im afraid

Customer:

Hummm... Thats what I was hoping for here... I pretty much knew the British answer to the position in terms of how the HMRC would look at this

seanferguson13 :

I can only advise on UK law I'm afraid

Customer:

OK!... do you have a Portuguese counterpart or someone in portugal who can assist?

seanferguson13 :

No I don't - I could find you a Portuguese lawyer but aside from that there is little else I can advise

Customer:

I will be grateful for any help that you can offer... Many Thanks, ***** ***** been helpful and re-enforced many of the arguments

seanferguson13 and other Law Specialists are ready to help you
Expert:  seanferguson13 replied 2 years ago.

I think when I put names in here it gets starred out so try going to http://www.garrigues.com/en/RedDeOficinas/Paginas/lisboa.aspx

I've used Garrigues before (albeit for a Spanish law question) and they were very professional. It could mean their fees are not cheap though...

Best of luck.