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cgt avoidance?

house gifted over a number of years to avoid CGT - acceptable?

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if a house owned jointly by spouses is transferred gradually at the land registry over a number of years to their child ,  who has lived in it for a number of year without paying rent, to avoid CGT (as gains covered by annual allowance), is that acceptable with the taxman or will it fall foul of GAR (antiavoidance rule)? the house is being valued annually by estate agents. this scheme is being operated by solicitors. The market value could be less than 4x the annual exempt amount to ensure no declaration necessary. thanks.

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Stepurhan
By stepurhan
22nd Jun 2021 11:56

Sounds like ripe GAAR territory for me. A series of linked transactions with the sole purpose of avoiding tax. I would think this would be a slam dunk for HMRC.

I would be interested to know why a solicitor thinks otherwise.

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By Justin Bryant
22nd Jun 2021 12:01

This is a million miles away from the GAAR and is perfectly legitimate, plain vanilla CGT mitigation planning and you could potentially be sued à la Mehjoo v Harben Barker if you did not recommend it.

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By The Dullard
22nd Jun 2021 13:49

Unusually, I find myself agreeing with Justin that the GAAR is not in point, by operation of the so-called double-reasonableness test.

It might be different if the facts pointed to there being a contractual arrangement in place. See https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg18150

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By K81
22nd Jun 2021 15:37

really common practice that I have come across many times over the years. I believe that a lot of solicitors suggest this under Inheritance tax planning.

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By ireallyshouldknowthisbut
23rd Jun 2021 09:54

There is a very important distinction between multiple gifts

And one gift made over multiple periods.

They key is to work out which it is, and the tax treatment will follow.

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By JD
23rd Jun 2021 10:12

Presumably the same can be done between directors and their companies. Asset in (in tranches) and cash out.

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