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Sam
Sam, Accountant
Category: Tax
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I have a tax loss brought forward, but our investments are

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I have a tax loss brought forward, but our investments are in my wife's name. We need to sell some investments which have a substantial gain. Can I transfer them to my name before sale in order to offset the gain abainst my brought forward loss?
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi

Thanks for your question, I am Sam and I am one of the UK tax experts here on Just Answer.


The answer is yes, of course this is a tax efficient way to proceed, however , if possible make the transfer into joint names this tax year, and then sell after 05/04/2015, when you then utilise the loss (which you carry on through to 2015/2016)

The reason I advise this, as HMRC could argue that the transfer was made to avoid (rather than save)tax, and refuse the loss claim due to the fact it all takes place in the same tax year.
Then you open up a long and frustrating appeal, that could end up with the loss claim being disallowed.
And just splitting the two positions over the two tax years, forfeits this strong argument that HMRC could argue on.

So if you proceed with the transfer and sale this year, just be mindful of this.

Thanks

Sam
Customer: replied 2 years ago.

Unfortunately we cannot spread the transaction over two tax years. What is the difference between avoiding tax and saving tax?

Expert:  Sam replied 2 years ago.
Hi Robert

Thanks for your response

That's the million dollar question!

The basic line is this, any transaction that takes place - with the clear purpose to reduce ones tax liability, in itself is not avoidance. But when two or more transactions take place in the same tax year (or within a short time) that alter the tax position from what it otherwise would have been, this will lead HMRC to examine the position more carefully.

A gap of a tax year, sees a separation of activity (hence the suggestion) but for this all to happen in the same tax year, doesn't see its treated as tax efficiency or tax planning but tax avoidance, and that's the issue I would not like to see you fall foul of

If you undertake both transactions in this tax year, it would look like the transfer has been made to avoid a larger (true) tax bill, and that is how HMRC will view it, as the transfer would have been made for no other reason than to reduce the tax.

Thanks

Sam

Sam, Accountant
Category: Tax
Satisfied Customers: 13775
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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