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Land with planning permission

I have a client who has inherited a plot of land from her mother.

Probate value £240000

Value after planning permission 7.5 million

She plans on selling to a building firm for the 7.5 is this a straightforward cgt calc ?

Thanks

Jon

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By Ruddles
21st Feb 2016 17:23

Yes
Provided that it's an outright sale with no provision for anything extra from the development.

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21st Feb 2016 18:35

Does anyone have experience of...

HMRC invoking the transaction in land rules?  What caused this?

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Self-assessment

snickersinatwix wrote:

HMRC invoking the transaction in land rules?  What caused this?

Where a transaction falls within the transactions in land rules, it is self-assessable. The only anti-avoidance legislation that I am aware of that needs to be "invoked" by HMRC is the transactions in securities rules, but even that is changing.

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By Ruddles
21st Feb 2016 19:04

Yes, I have

But subject to the limited info in the question I can't see them being applied here.

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By NPT1
22nd Feb 2016 14:53

When was the death?

When was the death, HMRC are more likely to query the probate value rather than the land transaction rules. Assuming that there were £100K of other assets then 40% of any uplift in probate value as well as interest and penalties is a very easy win. £240,000 to £7,500,000 is one hell of an uplift.

HMRC do now check land registry dealings and one solicitor went to prison for putting on a false probate value on his Mothers house.

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22nd Feb 2016 16:34

Valuation at date of death

If the death was recent, say within the last two years, I would share NPT1's concern, since the land could well have had substantial hope or development value before planning permission was granted.

If the land was not valued by a chartered surveyor (with knowledge of the market and the planning authority for the area in which the land was situated) who had been instructed to value the land at open market value for inheritance tax and probate purposes the PRs or others who have completed the inheritance tax and probate returns may be at risk - see link at https://www.gov.uk/government/uploads/system/uploads/attachment_data/fil...

If you were not acting for the PRs of the deceased mother's estate it will not be a matter for you to advise upon but nonetheless it may be prudent to ask the question since your client may well be exposed to risk as a beneficiary of mother's estate if HMRC do decide to inquire into the value adopted for probate purposes. 

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