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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 16550
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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A gift of commercial properties was made in 2005. This was

Customer Question

A gift of commercial properties was made in 2005. This was recorded in a Partnership Deed as between the Donor and the Donee, but the Donor did not make a return to HMRC at the time and the title at the Land Registry remained in the Donor's name. The Donee wants the title now put into joint names on the basis that the Donor has been a "Bare Trustee" since 2005 and that there will now be a transfer at a nil consideration so no CGT now. , but the donor is concerned that the Revenue will take this to be a current transfer for value which will result in a large CGT liability. Can you please comment.
JA: Have you talked to a tax professional about this?
Customer: No
JA: Is there anything else the Accountant should know before I connect you? Rest assured that they'll be able to help you.
Customer: The Donor is the daughter of the Donee. The Donor inherited the property in 2003 from her late husband. The value of the property did not increase greatly between 2003 and 2005. Since 20005, the value has increased by a large amount.
Submitted: 14 days ago.
Category: Tax
Expert:  Sam replied 14 days ago.

Hi

Yes its the current value that the capital gain arises on as the tax point is at the change of title deed

Thanks

Sam

Customer: replied 14 days ago.
I do not think that is correct. If the gift was originally made in 2005 then that was the tax point not now. At any time between 2005 and now the Donee could have asked the Donor to transfer the title as of right and the transfer should therefore be at a Nil value so no Capital Gain now. My only concern is whether the Revenue will accept that if no return for a Capital Gain was filed by the Donor in 2005.
Customer: replied 14 days ago.
No please answer by text not a call
Customer: replied 14 days ago.
Please do not call me
Customer: replied 14 days ago.
Please confirm you are not calling me
Customer: replied 14 days ago.
Please do not call me.
Customer: replied 14 days ago.
Please answer by email or text.
Customer: replied 14 days ago.
The value to go into the Transfer Deed would be "Nil" with the explanation that the Donor has been holding the title on trust for herself as Donor and her daughter as Donee.
Customer: replied 14 days ago.
Are you going to say that the gift was incomplete until it was registered at the Land Registry?
Expert:  Sam replied 14 days ago.

Hi it is correct as its when the title deed changes  that gives rise to the tax point but why come and ask for expert advsie if you are going to disagree so just phone HMRC and they can clarify for you and the value is NOT NIL It has a consisderation!

Yes of course it was incomplete as still in the original owners name

Thanks

Sam

Customer: replied 14 days ago.
Thank you for your reply. However, in this case, the daughter, as Donee, contends that she has a beneficial legal interest in the property and she has placed a notice on the title register to protect that. If the property were to be sold, the daughter would claim a half of the sale proceeds. The gift in 2005 was legally documented by a Partnership Deed made between the Donor and the Donee, so that there is evidence of a "disposal". It would be the same as if there being a contract for sale which was completed, but just not yet registered. The Donor is a trustee for her daughter's share of the property and has been so since 2005 and so the issue is whether the Revenue will accept that, or is it absolutely clear that the Revenue would not accept that there has ever been a proper" disposal" for Capital Gains purposes? Thank you again.
Customer: replied 14 days ago.
Thank you. I do not want a call just a text reply.
Expert:  Sam replied 14 days ago.

Hi

but shes doe not as the title deeds are not reflecting that nor is there a lean against said title

The partnership deed has no legal bearing here I am afraid

Thanks

Sam