How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask bigduckontax Your Own Question
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4804
Type Your Tax Question Here...
bigduckontax is online now

I have inherited 2 shares in an offshore company that owns

Customer Question

I have inherited 2 shares in an offshore company that owns a property in Scotland. My father was the beneficiary of these. The house is the only asset of the company and my father the only shareholder. The property title is in the name of the offshore company. We have obtained grant of probate and the title of the property can now be put in my name. IHT has been paid. I am resident in the UK and do not own any property. Would I incur any tax liabilities if I am the new beneficiary of the shares and the title is put in my name?
Thank you.
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.
What has happened is that the company has made a gift of the house to you. Such gifts are outside the scope of UK personal taxation. The company, however, will be liable for the capital gain on the property, the difference between the acquisition and transfer value at market price. Companies are not subject to Capital Gains Tax as such, but any gain made is credited to the Profit and Loss Account and forms part of the Corporation Tax computation in the year of transfer.
Customer: replied 3 years ago.

Thank you Keith.

Once the asset is transferred to me the company will no longer have any assets and will be wound down as it's sole purpose was to hold the house. Apparently they will not have any tax to pay but the company administrators were more concerned that the transfer of ownership might give rise to tax liabilities for me. Am I right in saying that if title of the house is put in my name there will be no negative tax implications for me?

Expert:  bigduckontax replied 3 years ago.
No, it is a gift to you from the company and as far as you are concerned gifts are outside the scope of UK taxation.
Please be so kind as to rate me before you leave the Just Answer site.
Customer: replied 3 years ago.

not sure why it is considered a gift? my father set up the offshore company to purchase the house. For tax reasons he could only be the beneficial owner of the shares. When he passed away these formed part of his estate, IHT tax was paid on the value of the shares (based on underlying value of asset less my father's initial loan to the company and subsequent loans to the company). Can you explain why you view it as a gift?

Expert:  bigduckontax replied 3 years ago.
Right, the company is sitting there clear of all debt and taxes. If it transfers some of its assets free to some other body that is a gift.
What else could it be as far as the beneficiary is concerned and it was his interest which was the nub of the question.