When is a gift taxable income?

When is a gift taxable income?

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A friend (who I usually help complete her tax return) gave a wealthy acquaintance, over a period of a few months, some business-related advice.  Subsequently she received a significant cash gift from the acquaintance. It seems that the acquaintance was able to win a lucrative contract as a result of the advice given and the cash gift was a gesture of appreciation.  No suggestion of anything underhand/illegal/immoral arise. It was not in any way a business venture or trade for my friend but I am concerned that it might be caught by S687-S689 ITTOIA, or some other provision. There was no expectation of payment when the advice was being given, although friend admits that she had hoped the acquaintance would show appreciation in some way eg some wine. The cash received was a surprise and its size more so. Anyone have any views on tax position?

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By thehaggis
07th Dec 2014 16:06

Bloom v Kinder

As long as there was no contract, written or implied, it won't be taxable.  The test is whether non-payment could be pursued through the courts.

 

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By User deleted
07th Dec 2014 17:13

In order for misc income provisions of ITTOIA/05, particularly s.687 to apply there must be a contract, and that's not the case here. Another old relevant case is Scott v Ricketts.

As said above, as there is no enforceable right to receive this sum, it is not taxable.

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