CGT on gift?

CGT on gift?

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A mother transfers a house as a wedding gift to her daughter 12 years ago. The daughter has lived there since. The mother's accountant now says she is liable for CGT under the gift provisions.

Her solicitor argues (or attempts to argue) the transfer was simply perfecting the trust and mother a "bare trustee". He seems to think by creating a trust of land, it cures all problems.

Any ideas or comments please.

Matthew

Replies (6)

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By blok
16th Feb 2012 13:31

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What trust!?
It sounds like an outright gift.
If the daughter owns outright, no strings attached, the lawyer is talking nonsense.

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By MBK
16th Feb 2012 13:48

If mother originally acquired the house.....

.... as bare trustee for her daughter with the intention of transferring the legal title to her when she got married, then the solicitor is quite right and there are no tax issues.

But HMRC would expect to see evidence of this.

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By TaxationPete
16th Feb 2012 15:02

Assuming the property was originally in the mothers name and was gifted and the daughter is the legal owner then there was a CGT liability 12 years ago based on the value the mother acquired it for and the open market value at the date of the gift. Regards Peter

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By Iftikhar Ali
16th Feb 2012 16:52

Business Incorporation and Gooweill Creation

Hi There, I have a client who has been in business for the last 2 years trading as a sole trader. He has incorporated and is running as a limited company. I am now going through to working out how much goodwill to create and transfer to the limited comp. and as such I am now looking for some advice in this area. I know that you can introduced a goodwill if you transfer whole of the business including all its assets and the company can amortise goodwill and put it through as an expenses against its profits. what i am not clear about is how much goodwill i should introduce and how to claim relief so that the client does not pay tax on the goodwill he transferred to the limited company. I forgot the act and the section no under which this should be claimed. and also do I need to complete any forms to claim relief from HMRC on any of the forms?

Please advice.

 

 

 

 

 

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By Anthony123
16th Feb 2012 19:54

As is apparent from the replies above (apart from that on goodwill - perhaps best posted as a new query?) what is needed is a careful examination of the facts. When did this property first come into the family and from where? How has it been owned since legally and beneficially? What transactions have happened when? And above all what was the market value at each point in time?

It seems to me that possibly what has happened is the mother made the gift 12 years ago but never actually transferred legal title. She has now done this and the solicitor is right to say it perfects the daughter's title and that there is no occasion of charge now. But there is possibly a non notification 12 years ago. Has anyone actually asked the mother what was going on and what was intended?

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By blok
17th Feb 2012 06:35

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Surely the only way to transfer title to a property to someone is to effect the gift by disposition drawn up a lawyer.  Anything else is just too risky. 

The idea of holding a property on bare trust fills me with dread.

There is simply not enough information in the question for a conclusive answer.

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