A husband and wife paid a deposit for a new build property in Bucharest but it fell behind schedule and they exercised a get out clause to have the money refunded plus penalties. They received back £25k more than they paid. Is this chargeable under CGT?
I am thinking it may not be taxable, as the property was never completed it was never owned therefore no capital asset to charge but am not sure.
Would appreciate members views.
Replies (3)
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What you have...
... is a chose in action, which is an asset, and the penalties would be a capital sum derived from that asset. See S.22 TCGA 1992. Ss. 23, 26(1) and 51 don't help you.
The test...
... is simply to determine whether the compensation is a capital sum derived from the chose in action, or the underlying asset (which was rejected in Zim). in your case I don't think there is an underlying asset.