Client sells a property in 2007-08 (non-PPR) for £650K - CGT paid accordingly.
The purchaser is £70K short and so a loan agreement is effected between the vendor and the purchaser to allow repayment of the balance over a period of time. The purchasers have now defaulted on the loan (bankruptcy, we think).
Is there any way we can go back and amend the disposal proceeds (and get a refund of CGT) on the basis that the consideration has changed to £580K? Or are we stuck with a £70K capital loss to carry forward? Or does it depend on what the sale contract or loan agreement says?
Many thanks
Replies (8)
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Were the vendors not advised to take a charge over the property to secure the unpaid consideration?!
Swedish meatballs
Just a note of caution - would the decision in Coren v Keighley affect this?
In that case the court found that if the whole or part of the proceeds of a sale were lent by the vendor to the purchaser there had been two separate transactions
a sale of the asset by the vendor to the purchaser with full consideration paida grant of a loan by the vendor to the purchaser.
If so, the key is obtaining the full and complete facts, by examining all the documents.
More meatballs
I'm sure you're right, but it might be important to look at what the rest of the agreement says.
Often there is a part of an agreement that sets the scene, traditionally prefaced with the word 'whereas' (though modern agreements often go for something plainer and less archaic). After the scene-setting comes the essence of the agreement, in the form of an exchange of promises.
This sounds like part of the scene-setting.