A client did some work for a Premiership footballer. Payment was requested and made for the services rendered, but he also gave our client a gift in the form of a football that had a number of well-known signatures on it. Circumstances are such that this ball is probably now worth more than £10,000.
Is my boy taxable on the original receipt of the ball at all? If so, just on the £20 value of it as a ball or on its inherent value at the time (£2,000?)?
And regardless of whether he owes income tax on it, would it then fall to be sujected to Capital Gains Tax or could it be treated as a chattel and therefore escape any CGT?
Marion Morrison
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Replies (5)
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Check the market...
I'm not sure about the taxation priciples, but there is a fairly ready market for sprting memorabilia, so it may be worth getting an independent valuation (from an auction house), or even researching on the web (try here http://www.spiritofsport.co.uk for instance) just to get a better idea of the size of the issue.
Hope this helps
our client - my boy!
i would hold the following (no pun intended)
if the fee was paid in full the use Pepper v hart to establish the cost as the cost to the footballer - the ball probably came from club anyway, so nil - any sale value and therefore CGT can be established on sale, its no longer an IT question as it is too vaulable ? to be a chattel, it may be just below the limit or wait till T Relief is available.
mind you why wasnt it the congressional medal of honour
A gift? A chattel?
If the ball was genuinely a gift then it should not be a taxable receipt in your clients hands although there have been cases where gifts directly related to the taxable activity have been held to be a trading receipt - a 'gift' to a jockey of a winning horse, a card school proprietors winnings - if genuinely not expected I think it would be difficult to argue that it is a trade receipt, however if it is then its sale would generate futher trading income if it contiuned to be held as a trade asset or at MV if appropriated from the business at an earlier date.
As a chattel, which it clearly is, the exemption only applies to chattels with a value below £6,000 and a tapered relief above that level, so it would seem to be fully chargeable to CGT, and of course taper relief is applied AFTER the chattel exemption not before so it looks like a liability will arise. Given the value is derived from the signatures rather than the ball itself I don't think you would get away by arguing that it is a wasting chattel.
Or...
or give it to his deserving accountant. Actually if this chap is aware that he is potentially CGTable on it, he might well be amenable to this as a solution and it would be much better-marketed as a charity auction thing.
It has been professionally valued as worth more than £10K - it's so long since I dealt with any chattels, I'd forgotten the limits.