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North Cyprus Immovable Property Commission

North Cyprus Immovable Property Commission

A potential client has raised the question of the UK tax treatment of compensation received from the North Cyprus Immovable Property Commission. The comission was set up to consider claims from dispossessed Greek Cypriots, following the informal partition of the island in 1974.  TheThe ttThe c

The potential client is both UK resident and domicled but her deceased husband owned part of a business in Cyprus on which the claim is made. It now appears likely that a compensation payment will be made later in the year and the compensation is likly to be very substantial.

Can anyone offer any comments on the likely UK tax implications in respect of the receipt of this compensation.

Thanks

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By Hansa
01st May 2012 17:37

No definitive answer, but consider ...

I can't answer definitively but you might consider the following: 

The compensation includes/is substantially an amount for being deprived of property which the claimant should have had. This would I think be non taxable in the hands of the (deceased) husband.It is possible, (even likely), that the deceased was a Cyprus resident at the time (1974) that the property was abandoned.  His claim therefore was established in Cyprus, not the UK while he was (probably) a tax resident of Cyprus.  Had he been able to sell his investment before coming to the UK it would have been subject to Cyprus, not UK tax.The compensation could be construed as being part of the husband's estate (with the consequent IHT complications) 

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