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bigduckontax, Accountant
Category: Tax
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I purchased 200 aquilaria trees growing in Thailand The trees

Customer Question

I purchased 200 aquilaria trees growing in Thailand The trees were 3 years old and after 5 years the trees have now been harvested(8years old). I I have rreceived payment for the oud oil extracted from them( which is used to make perfume etc) am I exempt from Capital gains tax? I live in the uk.
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.
This is trade income and not capital gains and you should have registered with HMRC 5 years ago - so this will need rectifying - although its likely income would only have arisen from the date the trees were harvested (onwards) but I imagine you had costs between 5 years ago to date which HMRC nee to know about
Thanks
Sam
Customer: replied 2 years ago.
Hi Sam i am an dividual not a company and these trees were purchased through an investment company Asia Plantation Capital i paid £1000 per annum for 3 years for upkeep and maintenance of the trees. the regulations have changed since i made this investment and as an individual i would not be allowed to reinvest now but at the time it was legal. Asia Plantatioon Capital are a huge company in asia and have won many awards for their green investments of sustainable forestry in aquilaria (agar) and teak plantations. They have offices in singapore uk usa australia etc. does that clarify matters? Do you require any other info? Is this a "green" investment and is it therefore exempt from CGT?
Expert:  bigduckontax replied 2 years ago.
Sam has opted out of this question..There is no exemption to UK CGT for such items and in any event your profits are income not capital gains. I endorse Sam Tax's opinion on the matter. You must declare such profits on a self assessment tax return at the conclusion of the relevant tax year in which they were made. If you are an EEA citizen your are, of course, entitled to a personal allowance, currently 10.6K to offset income.
Customer: replied 2 years ago.
I am totally confused !! If i purchased the trees as an individual and have now sold them surely the profit is subject to cgt the same as when you buy and sell rented property. I was under the impression i had an allowance of £11k for cgt on top of my personal allowance but now you are saying the profit is trade and must come out of my personal allowance? I am an individual not a company! My basic question was is a "green" investment as an individual exempt from gct? Please clarify. Thanks
Expert:  bigduckontax replied 2 years ago.
Unfortunately it is not the same as rented property and these horticultural items transactions are not subject to CGT, but to Income Tax, as Sam Tax told you and I confirmed. There is no such thing as 'green' investment. Whilst you are correct in your thinking that for CGT there is an Annual Exempt Amount of 11.1K [14/15 rates], I must emphasise that your trading does not attract CGT, but is merely normal self employment trading.
I am so sorry to have to train on your parade. However, all is not lost for Confor advises for commercial forestry taxation that:
'Profits from the sales of timber are tax free, rents and other revenue receipts from woodlands are liable to Income Tax.'
This may get you out of trouble. Here is further advice from the same source concerning the definition of commercial woodlands:
'There is no definition of commercial woodlands. They are best described as woodlands which are "managed on a commercial basis with a view to the realisation of profits." There should be evident intent to make profits - income or capital - and the usual attributes of a commercial business such as professional management, separate bank account, VAT registration, accounts, etc.'
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Customer: replied 2 years ago.
Hi thanks for that. Please advise who or what is confor and can i quote it if i still need to complete a tax return? Thanks
Expert:  bigduckontax replied 2 years ago.
Corfor is a pressure group promoting forestry. You can find it here:
http://confor.org.uk/Default.aspx?pid=1
You most certainly can quote it, but as the profits from sale of timber are tax free there is no requirement to declare. Just keep it in mind in the event of some future inquiry.
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Just one tiny amendment to my second post: paragraph 2, line 1; delete 'train,' insert 'rain.'
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4423
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.