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Deferred payment on disposal of freehold property

Any relief available ?

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A Client purchased a buy to let freehold property in 2017 - base cost £112,500

In June 2019 he sold the property at £145,000 (professionally valued) to a newly formed 100% owned Limited Company,
£115,000 being paid on completion and the balance of £30,000 to be paid over 6 years at £5,000 p.a.

Can he defer CGT on the £30k?

Replies (50)

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By chicken farmer
23rd Jan 2020 17:17

See sections 48 and 280 TCGA.

If this is a connected persons' disposal then you will have to negotiate the open market value with HMRC - is the company's valuer confident that he can justify his valuation?

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Replying to chicken farmer:
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By Tax Dragon
23rd Jan 2020 17:33

The sale is deemed to be for a consideration equal to the market value (s17(1)). Actual consideration doesn't matter. Can s280 apply even in theory? (Obviously, it's no practical use here anyway, but that's not the point.)

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Replying to Tax Dragon:
Psycho
By Wilson Philips
23rd Jan 2020 20:24

We had to address that very question a couple of years ago and the general consensus was that section 280 cannot apply to deemed market value disposals.

If I recall correctly, one of the arguments was that if there was no actual consideration, section 280 would otherwise defer payment of the tax indefinitely. There is a presumption that the market value deemed consideration is paid on disposal.

The answer to the OP’s question is “yes”, BTW.

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Replying to Wilson Philips:
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By whitevanman
24th Jan 2020 09:57

I don't think I would (wholly) agree that S280 " cannot apply to deemed market value disposals".
Take the case cited by the OP. Disposal is for £145k. Connected party rules say the disposal is deemed to take place at OMV. What if £145k is the OMV?
What if OMV is £150k? or £200k?
I agree that, logically, S280 cannot apply to the part that is not paid / intended to be paid, for the reasons you gave. But in a case where actual consideration is payable, I suspect S280 can apply to any amount payable but deferred, as in the OP.

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Replying to whitevanman:
Psycho
By Wilson Philips
24th Jan 2020 10:38

I suppose it depends on how you interpret the legislation, as always.

Section 17 says that the disposal is treated as made for consideration equal to MV. It doesn’t say that any consideration received is to be treated as being an amount equal to MV. To me, therefore, that says that actual consideration is completely disregarded, even if by coincidence it happens to be the same as MV.

Section 280 then refers not to the consideration payable but simply to the consideration taken into account in computing the gain. Since such consideration a deemed amount only it matters not, IMO, that actual consideration happens to be the same amount (or indeed greater)

However, in the circumstances you suggest, I would not be surprised if an HMRC Officer were to “get it wrong” and grant 280 treatment.

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Replying to Wilson Philips:
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By Tax Dragon
24th Jan 2020 10:52

"Disregarded" is a better word than my "ignored", thank you.

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Replying to Tax Dragon:
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By Tax Dragon
24th Jan 2020 11:07

Oh I see "ignored" was only in my head until now! :-p

(Perhaps whether you say "ignored" or "disregarded" - it doesn't matter...)

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Replying to Wilson Philips:
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By whitevanman
24th Jan 2020 12:53

Whilst appreciating your logical interpretation, I still cannot agree.
S17 can be viewed as anti-avoidance legislation designed to ensure that the "correct" amount is brought into charge. It is concerned solely with the computation of the gain / loss. It talks of "a consideration" it does not define what that consideration is. It's purpose is simply to set the amount.
S280 is a measure designed to relieve taxpayers of potential hardship that might result where tax would otherwise be payable before the actual cash had been received (broadly). It talks of "the consideration" not "the amount". It is looking at facts not what is deemed.
If a connected party sale takes place at OMV, why should the seller be treated differently to anyone else? Why should (s)he be denied the relief that parliament intended when enacting S280?
The recent case dealing with PPR on property bought off plan (sorry cannot recall the name just now) emphasises that a deeming provision should only be interpreted so as to produce the result intended by parliament. I would suggest that, interpreting the legislation as you suggest would fall foul of that principle.

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Replying to whitevanman:
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By Tax Dragon
24th Jan 2020 13:06

You read a lot into "a" -

whitevanman wrote:

It talks of "a consideration"...

- and most of what you read in is supported by arm-waving, not by reference to statute. (You have form for that, if I may be so... erm, I'm going for provocative-but-not-offensive.)

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Replying to Tax Dragon:
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By whitevanman
24th Jan 2020 14:13

In fairness to me, the courts read a lot into the actual words. As said to Wilson in my reply to her, I stand by what I have said.
I don't mind provocative or (even) offensive from someone who actually adds sense to most threads (just not this one!).

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Replying to whitevanman:
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By Tax Dragon
24th Jan 2020 15:18

Thank you for the kind words.

For this thread... yup, 'twas me that started this 'deemed' ball rolling. I thought there might be a point to be discussed. I think that has proved to be the case :-)

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Replying to whitevanman:
Psycho
By Wilson Philips
24th Jan 2020 13:33

Acknowledging that it is only guidance, and that HMRC are often wrong, you might want to look at CG15020

BTW, I do not disagree that there is an apparent inequity in a case where someone makes a ‘genuine’ sale at MV to a connected party with payment by ‘normal’ instalments. But with connected parties there is always the prospect of fairly straightforward abuse.

The problem is that the legislation does not operate to top up (or reduce) actual consideration to arrive at MV, it simply replaces one with the other.

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Replying to Wilson Philips:
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By The Dullard
24th Jan 2020 13:45

God I hate the messy way threads end up being laid out.

HMRC's view makes no sense given that:
- if I gift a house to my brother I can pay the tax by instalments under s 281,
- but if I sell it to him at full market value, allowing him to pay me in 10 equal annual instalments, I seemingly can't.

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Replying to The Dullard:
Psycho
By Wilson Philips
24th Jan 2020 14:14

Just as nonsensical is the situation whereby an outright gift would allow payment of tax by instalment but payment of £1 for the property would not.

But tax is often nonsensical or illogical or unfair. Who knows, though - perhaps if tested in court, HMRC’s view may be brushed aside. Until it is, clients need to be aware of the line that they would take, particularly if being advised to adopt a contrary treatment.

Having said that, section 281 offers a very specific relief - recognising that where there is a gift of specified assets (generally which cannot be readily converted into cash) there are no proceeds at all from which to pay the tax. In isolation, therefore, I don’t see anything wrong with the interaction of 17/280

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Replying to The Dullard:
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By Tax Dragon
24th Jan 2020 14:10

Agreed on the layout.

HMRC's view makes perfect sense, in that it is based on legislation. Whether the legislation is 'fair'... well, possibly not. But (the courts have said) HMRC must apply the law.

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Replying to Wilson Philips:
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By whitevanman
24th Jan 2020 14:07

As you say the HMRC guidance is just that and we all know they don't always get it right.
I stand by my previous comments which seem to be supported by the recent case on PPR. Somehow doubt we will ever see it litigated though.

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Replying to whitevanman:
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By Tax Dragon
24th Jan 2020 14:13

whitevanman wrote:

As you say the HMRC guidance is just that and we all know they don't always get it right.
I stand by my previous comments which seem to be supported by the recent case on PPR. Somehow doubt we will ever see it litigated though.

Justin would be proud of that tangential logic. (In fact, I'm not sure it's even tangential... tangents have a point of contact.) The PPR case sheds light on s17 how, exactly??!

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Replying to Tax Dragon:
Psycho
By Wilson Philips
24th Jan 2020 14:24

What he is saying, I believe, is that deeming provisions should only be applied to the extent that they result in the intended outcome. So that in this case section 280 should apply in respect of actual consideration. How would that work in practice? You sell a property worth £500k for £250k to be paid over 5 years. Do you pay tax on £250k ‘immediately’ with tax on the other £250k in instalments?

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Replying to Wilson Philips:
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By Tax Dragon
24th Jan 2020 15:04

Wilson Philips wrote:

What he is saying, I believe, is that deeming provisions should only be applied to the extent that they result in the intended outcome.

Ah OK. Thanks. But what, pray tell, does he think is the purpose of s18(1)&(2)?

Wilson Philips wrote:

How would that work in practice?

I don't see how it would - the example you give sees to that... unless s281 can kick in for the first £250k. You seem confident it couldn't, but apply a bit of whitevanman logic, and could you soften?

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Replying to Tax Dragon:
Psycho
By Wilson Philips
24th Jan 2020 15:28

No. A gift is a gift. Otherwise we’d end up in real mess where all undervalue transactions would need to be split into 2 components - a gift element and. MV element.

I don’t see the relevance of the reference to section 18. The issue is the deeming provision at 17(1). The point being that instead of applying an outright exchange of actual consideration for MV consideration the courts might be minded to consider that the effect of 17(1), as I alluded to earlier, might instead be to top up the actual consideration to give the taxable amount but allowing 280 to apply on the actual deferred element. That seems entirely sensible to me but it is not what the legislation says, or at least it is not what HMRC thinks that it says.

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Replying to Wilson Philips:
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By Tax Dragon
24th Jan 2020 15:44

S18 invokes s17 even if the deal is on arm's length terms. Why would it do that, if s17 had no consequent effect?

But forget that point. WVM suggests that s17 is merely computational. Yet it doesn't say "the gain shall be computed using market value"; it says "for the purposes of this Act" there shall be deemed to be a consideration equal to the market value of the asset. Seems to me that the deemed consideration replaces the actual consideration in all places that consideration is referred to in the Act.

I appreciate that that could have odd consequences (that really don't 'feel' right). For example, can deemed consideration be utilised as per s152?

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Replying to Tax Dragon:
Psycho
By Wilson Philips
24th Jan 2020 16:03

I think we are in complete agreement as to the operation of section 17 as it stands.

I see no reason why section 152 should be affected by anything in section 17. If section 17 deems there to be consideration of £599k on a disposal and £599k is invested in a qualifying asset rollover should be available.

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Replying to Tax Dragon:
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By whitevanman
24th Jan 2020 16:41

I go out for an hour and look at how many more posts there are! I shall limber-up the arms.
I think Wilson has explained the thrust of my argument.
I know we should ignore the rubric but S17 is in the part of the Act on computation but I agree it does apply "for the purposes of this Act" where appropriate.
That said, it is not a definition section and does not seek to define what "consideration" is or means. It refers to "consideration equal to..." and so is clearly concerned with the amount.
If needed, S18 (which applies S17 to connected party transactions) refers, for example in subs (6) ..."(where the amount of the consideration...is...deemed to be equal to the (MV))"
So, perhaps S17 should be read as saying that the disposal is for an amount of consideration equal to the MV.
That would make sense and it would then result in S280 being capable of application because it refers to "the consideration" (as in the actual consideration rather than the deemed amount).
Again as Wilson said, the result would be that the effect of S17 would be to "top up" the amount for the purposes of calculating the gain. Any deemed amount could not be the subject of a S280 claim (for the obvious reasons) but the actual consideration could be, to the extent the conditions were met.
There is nothing in any of this which offends a principle of statutory interpretation. On the contrary, it is the only interpretation that avoids the unnecessary restriction on S280 that HMRC seems to prefer, without any obvious reason.
I know we are unlikely to ever see the case but, do you think HMRC would take a case (or at least, would they win one) where a director was "paid" full MV for an asset by his company but the payment was deferred because the company couldn't pay in one instalment? I for one think not, especially given the recent PPR case to which I previously referred.
That said, I also agree that any client needs to be made fully aware of HMRC's interpretation. But I would certainly challenge it in a suitable case.

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Replying to whitevanman:
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By Tax Dragon
24th Jan 2020 18:09

Having started this debate, I guess I am obliged to comment?

whitevanman wrote:

So, perhaps S17 should be read as saying that the disposal is for an amount of consideration equal to the MV.
That would make sense and it would then result in S280 being capable of application because it refers to "the consideration" (as in the actual consideration rather than the deemed amount).

You love adding to some sections and taking away from others, at will, to suit your belief as to what it 'should' say. Sorry, but I think that does offend principles of statutory interpretation. (The courts can get away with that; it's harder for others to :-))

My [admittedly incomplete] understanding may be summarised as: if what is said is clear, you apply the law as written; if it is not clear, a court might seek to establish what Parliament intended.

You're latest addition: "n amount of" added to s17.
Meanwhile, you've ignored "taken into account in the computation of the gain" in s280. Even (if not especially) on your interpretation of s17 - that it is a computational provision - isn't "the consideration taken into account in the computation of the gain" precisely that fictional amount determined by s17? It doesn't have to define "consideration" to apply in this way; it just has to tell you how much to include in the computation - and we all agree it does that.

In reality, none of this matters a jot. We're not arguing over a filing position here. The filing position is clear - gain per s17. S280 permits payment by instalments "at the option of" the taxpayer, but by agreement of the Board. The Board has said that s280 does not apply. You could ask - and might get - but there's nothing to take to court if they don't agree.

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Replying to Tax Dragon:
Psycho
By Wilson Philips
24th Jan 2020 18:32

A solution - bearing in mind the existing apparent discretion avaiable to HMRC as to whether to grant s.280 relief - might be to change the wording of s.280 to allow relief on the tax attributable to the actual amount of consideration actually receivable, with consequential computational amendments as required. I believe that would satisfy WVM's concerns?

But since all connected parties are always "at it" (cough) abuse would be widespread, wouldn't it. For instance, I want to transfer my BTL portfolio to a company to benefit from lower tax rates and unrestricted finance cost deductions. Apart from the SDLT cost, the major tax block to such arrangements is often the CGT arising on transfer. Solution - agree to sell the properties to company for MV, with a contractual obligation to pay instalments of £1 per year for at least 8 years. CGT not avoided, but at least deferred for a significant period of time. Problem with solution - HMRC unlikely to grant s.280 treatment and/or falling foul of GAAR.

Conclusion - leave well alone.

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Replying to Tax Dragon:
Psycho
By Wilson Philips
24th Jan 2020 18:33

And it certainly matters not a jot as far as the OP is concerned. s.280 isn't in point but there are other means of deferring payment.

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Replying to Tax Dragon:
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By whitevanman
24th Jan 2020 18:42

I feel equally obliged to reply to at least some of your comments.
Whilst I have indeed added something to S17, it is not merely whim or what i would like it to say. Read what it says in S18(6) to which i referred in my last post. If the draftsman uses the wording, it is surely OK for me to do so.
As far as the law is concerned, if the law is unambiguous and does not give rise to "absurdity" you do indeed apply it as writ. Where that results in a result that clearly cannot have been intended, the courts (sadly not you or I) will interpret in such a way as avoids such absurdity. I have given a clear example of absurdity and set out an interpretation that avoids that absurdity and does not strain the actual language of the statute. I think I'm doing OK!
As to S280, it merely talks about "the consideration taken into account". Since the deeming provision only talks about the amount, it is not stretching things too far to say that the consideration comprises what is actually received / paid but at an enhanced value. That leaves open the claim for which I contend.
I agree it is all academic. I wonder however if HMRC would change their interpretation, if challenged, to take account of the recent judicial guidance as regards deeming provisions etc.

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Replying to whitevanman:
Psycho
By Wilson Philips
24th Jan 2020 19:10

We're at risk of wandering into a maelstrom of interpretation. I sell an asset worth £500k to a connected party for £300k. I read s.17 as saying "We know that you sold the asset for £300k but we're going to treat you as having sold it for £500k." That is not the same as saying that the £300k cash that I received is somehow worth £500k. £300k in cash is worth £300k - you can't enhance its value (unless you've got some special Jane Austen fivers in there).

That's not to say that I don't understand your logic - I just happen to think that it is flawed (just as you are entitled to pick holes in mine).

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Replying to Wilson Philips:
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By whitevanman
24th Jan 2020 20:34

I appreciate you don't agree my interpretation and that anything I say is unlikely to change that. So be it.
I would however like to try (one last time) to explain my point. Apologies therefore if you feel I am just banging on. It is not my intention.
We know what S17 says about "a consideration equal to MV".
S18(6) however, says:
".. in a case ....then ( where the AMOUNT of the consideration...is, in accordance with subs 2 above deemed to be equal to the MV. ."
The subsection itself is not relevant to the case under discussion but it shows how the draftsman thought S17 worked. That is to say it fixed the AMOUNT at MV.
S280 refers to "the consideration or PART of the consideration taken into account.."
The HMRC interpretation at CG15020 says S280 cannot apply because "the deemed consideration is not a deferred payment".
That implies that they regard S17 as fixing the consideration (as a thing) rather than just the amount thereof. That is at variance with what is said in S18(6).
It is that interpretation which is the only bar to S280 applying in your example.
As emphasised above, the section itself covers parts of the consideration and so could apply but for that interpretation.
If however S17 is read as fixing only the amount, the fact would remain that part of the consideration (that is to say the real part) is deferred and so S280 could apply.
As I say, I don't expect this has changed your view but at least it has, I hope, explained how I think it would apply to your hypothetical situation.
Thanks for reading. Arms down now, dinner awaits.

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Replying to whitevanman:
Psycho
By Wilson Philips
24th Jan 2020 20:55

The partial reference in s.280 simply deals with the case where only some of the consideration is deferred. It is not intended, IMO, to envisage consideration comprising of different elements such as actual and deemed (although of course actual consideration may take more than one form).

I don’t see any conflict between s.17 and s.18. S.17 fixes the consideration (being a fictional ‘thing’) whereas s.18 merely refers to the amount of that thing.

Like you, I do not imagine that this will in any way convince you so my arms are also down now.

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Replying to chicken farmer:
Psycho
By Wilson Philips
23rd Jan 2020 20:37

Replace “will” with “may” and remove the references to s48 and s280 and I’ll agree with you.

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By chicken farmer
23rd Jan 2020 23:47

I suggested the questioner should read those sections to complete his or her education and, hopefully, they will not need to ask similar questions in the future.

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Replying to chicken farmer:
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By Tax Dragon
24th Jan 2020 09:32

I like the intention. I really do. But by way of feedback, also freely offered, I think that if we all start answering OPs' potential future questions and not their current ones, we'll end up confusing them, not educating them. (Especially if, we don't say - as you didn't say - that that's what we're doing.)

In short, we wouldn't fulfil your intention. Your reply read without reference to the subsequent conversation, IMHO, does the opposite of what you say you intended.

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Replying to chicken farmer:
Psycho
By Wilson Philips
24th Jan 2020 08:05

Point taken but neither of the sections referred to are of any relevance in this particular case.

Caveat - there is a massive assumption here in that it is assumed that it is the transferor that is the 100% owner of the company. That might be inferred from the text but but it could be owned 100% by an unconnected party - in which case your original response stands. (Although that would then make the second part redundanr.) If only you had started the first part with “If this is an unconnected persons’ disposal ...)

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Replying to Wilson Philips:
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By The Dullard
24th Jan 2020 12:02

Why is s 48 irrelevant please.?

The suggestion is that full market value is, over time, going to be paid in actual cash, so s. 162 isn't going to be relevant, if that's your thinking.

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Replying to The Dullard:
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By Tax Dragon
24th Jan 2020 12:25

As per the s280 point, the cash doesn't matter(/is disregarded/ignored).

The consideration for the disposal as referred to in s48 must be the figure deemed to be paid by s17.

It's possible that s48 acts to treat this as received straightaway - so Wilson's earlier "presumption" may be enforced by s48, but I can't see any other relevance of the section. What are you getting at?

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Replying to The Dullard:
Psycho
By Wilson Philips
24th Jan 2020 13:06

Section 162 hadn’t entered my mind. I consider that section 48 is irrelevant for the same reason that section 280 is. If section 17 applies the consideration taken into account is deemed consideration and the amount, and timing, of actual consideration is irrelevant. If the presumption is that deemed consideration is paid at the time of disposal section 48 then becomes redundant.

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Replying to Wilson Philips:
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By The Dullard
24th Jan 2020 13:41

Wilson Philips wrote:

The answer to the OP’s question is “yes”, BTW.

I was referring back to this... but I see where you're coming from now.

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Replying to Wilson Philips:
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By chicken farmer
24th Jan 2020 12:36

S. 48 is entirely relevant. It sets out the basic proposition that the whole of the gain falls into charge in the year of disposal with no account being taken of any delay in receiving the proceeds. S. 280 might be relevant if the conditions are satisfied (and, obviously, there is actual consideration payable over a period of time.

Note that I did not make a 'massive assumption' that this was a connected persons disposal, I merely suggested that 'if' it was, then he or she needs to be aware that valuers will often cave in when it comes to negotiating with the Valuation Agency.

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Replying to chicken farmer:
Psycho
By Wilson Philips
24th Jan 2020 13:06

But if section 17 operates to apply a deemed MV consideration which, by definition, is received in full at the time of disposal (I would like someone to explain otherwise how deemed consideration can be deferred) section 48 is an irrelevance.

For the same reason section 280, which refers to the consideration used for calculating the gain (being deemed consideration where section 17 applies), cannot apply regardless of whether there is actual consideration. Because that consideration is not the consideration used for calculating the gain.

It was myself making the connected party assumption in explaining why I consider the two sections to be irrelevant.

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By Accountant A
23rd Jan 2020 18:18

Coincidence that the deferral is the amount of his capital gain! What was the chance of that?!

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By Montrose
24th Jan 2020 18:08

I read between the lines a remortgage to enjoy interest relief on mortgage interest- but that implies no charge on the unpaid instalments as they would not acceptable to a third party mortgagee .
Any surplus of rent over mortgage interest would then available after CT to pay the instalments-hopefully tax free?

What security is being given for unpaid instalments, what interest is payable ?

I agree with the general consensus on the unavailability of installment relief.

The question ignores the practical point that even if installment relief were available its utility is very limited, as £23790[ 115/145 *£30,000] of the gain would be taxable immediately and payable within 30 days after the contract is executed and the initial payment is receivable. So the only possible deferred gain to be spread over 6 years is £6210

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Replying to Montrose:
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By Tax Dragon
24th Jan 2020 18:15

Montrose wrote:

The question ignores the practical point that even if installment relief were available its utility is very limited.

Harsh.

The question was mine and read:

Tax Dragon wrote:

The sale is deemed to be for a consideration equal to the market value (s17(1)). Actual consideration doesn't matter. Can s280 apply even in theory? (Obviously, it's no practical use here anyway, but that's not the point.)

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Replying to Montrose:
Psycho
By Wilson Philips
24th Jan 2020 19:33

I disagree with your calculations. The whole of the gain is immediately taxable - the point is the due date for the tax.

If we assume that £145k is accepted as market value and accepting for a brief second that s.280 could apply, half of the first instalment, of £115k, will cover the tax due. So s.280 not in point in any case.

As for the 30 days comment, do you own a Tardis?

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Replying to Wilson Philips:
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By Montrose
25th Jan 2020 18:20

I don't have a Tardis, but I have read paras 1-2, Sch 2, FA 2019.

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Replying to Montrose:
Psycho
By Wilson Philips
26th Jan 2020 09:52

I have assumed that the BTL property is residential. You appear to have assumed the opposite. One of us is correct - I have no idea which.

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By Tax Dragon
25th Jan 2020 06:30

I don't want to extend the debate into the weekend (none of us can be sure whose interpretation is correct; all options seem to have been fully aired).

But I do have a couple of questions for wvm. I didn't - still don't - know the answer (to the question debated above). But my approach in attempting to answer it (Q1... is this approach wrong?) is to read the legislation and see if I can work out what it says. Wilson's answer seems to take the legislation at face value, so I find that answer persuasive.

In contrast, I virtually accused you of tweaking the legislation to suit your predetermined reading of it (the most egregious instance being when you added "where appropriate" after "for the purposes of this Act"... actually, extra question on that addition: where in the Act would you say it was appropriate to apply s17, assuming that, as in the OP, actual consideration = OMV? On the ignoring parts of sections front, you had to skip over s18(1)&(2) to reach ss(6), in which you found support for your reading of s17).

In the instant case, as I said somewhere, we're not discussing a filing position. I'd actually have no problem making the request under s280, and if HMRC agreed the request... result. But suppose it was a filing issue. How far do you think it is reasonable to tweak? Thinking back to the whisky barrel case, you seemed willing to invent a CGT election that - I'd agree - should have been available, but wasn't.

I guess I'm also wondering about your white space policy. We're professionally obliged to have a policy of full disclosure. That includes whitespacing where the view we come to differs from HMRC's published view. In the whisky case, I don't think there is a published view. I never said what I would do in a case like that, but some disclosure would seem essential.

The s17 case before us now is not a question of the filing position. But suppose it were. Your view seems clearly at odds with HMRC's (though I note you have tried to 'tweak' their guidance too, in the course of the discussion). Would you white space? How much do you explain in the note?

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Replying to Tax Dragon:
Psycho
By Wilson Philips
25th Jan 2020 09:16

I too am reluctant to continue into the weekend but since I was mentioned I’ll leave some final thoughts.

I have no argument with what WVM is “seeking to achieve”. I don’t see why, in principle, s.280 should not apply to any actual consideration in s.17 cases so long as there is no perceived abuse (bearing in mind that HMRC appear to have discretion anyway ). Despite what I suggested earlier, there shouldn’t be any need for computational amendments in the legislation since the s.280 procedures provide that an Inspector is to calculate the tax instalments due so I don’t see why a reasonable calculation of the tax attributable to actual instalments could not be carried out.

The issue is that as things stand I (and HMRC) consider that the legislation does not permit s.280 to apply. Unless and until the point is tested in the courts we will not know which of us are right (or wrong).

And with that, I’m done.

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Replying to Wilson Philips:
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By Tax Dragon
25th Jan 2020 09:57

Maybe I'm just having a mid-tax-life crisis. Maybe it's just that it's January. But this was one of a number of threads that's got me navel gazing. It dawns on me that Aweb isn't the place to work that out

@wvm. No worries about my questions.
@Wilson. I understand what you say. But I find it odd that you don't see the principle behind the rules (assuming, as I do, that your interpretation is the correct one - and indeed the intended one). Odd, because you yourself have pointed it out. S280 (and s281) provide an easing of the position where you haven't received proceeds to pay the tax. The reading of s280 that allows you to to defer tax in relation to actual proceeds but not deemed proceeds means that, the more money you are going to get, the less tax you have to pay up front. Where's the logic in that? (By now this is purely rhetorical/hanging. No response sought or wanted.)

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Replying to Tax Dragon:
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By whitevanman
25th Jan 2020 20:15

I am sorry to come late to this. Despite being Saturday I have been tied up all day.
I know you have said in the later post that no reply is necessary but I would like to respond on several points.
Firstly, I find some of the discussions on Aweb an interesting distraction. I add my thoughts where I feel I have something to say. Some might find it helpful, some not so. I don't really mind comments which are or appear to be, insulting. I do try not to stoop to that level myself because it adds nothing to the general pool of knowledge. It can however be amusing so I am not suggesting anyone else should have to refrain.
If you were to look back over posts that I have made, you might be forgiven for believing I am an apologist for HMRC. I am not but I do sympathise with their staff (more often than not) and do not think criticising them or going on the attack, is ever likely to progress the issue being discussed. All of this should give you a strong hint about my white space policy. Whatever the matter, I believe full disclosure is absolutely essential. I am willing to form a view which differs from that of HMRC and to explain to anyone who cares to listen. I am also prepared to be convinced that I am wrong. If that does not happen, I would be equally happy to take a case to litigation. I should say that I see many comments on Aweb that I find at best questionable. I believe one should base cases on facts. That is to say what actually happened. Many seem to suggest what would be a better outcome, based on totally different facts. Not for me.
You have made a number of comments about my interpretation of the legislation.
If you read again the bit in my post at 18.42 yesterday where I used the words "where appropriate" you will see that I made no attempt to add that to the legislation and I have not sought at any time, to use or imply some restriction. Nor does it form any part of my alternative interpretation.
As to that interpretation, I think I must have failed to explain it correctly, especially when I read your comments about s18(1) and (2). Those sections have nothing to do with what I was saying and no bearing on the interpretation point. They are important as they are what bring connected party transfers within the non-arm's length rule of s17 but as I say, they are nothing to do with my interpretation.
As to s18(6), I again wonder whether you have actually understood my point.
The subsection itself is not in point but, if you read it, you will see that when referring to the effect of s17 (the bit in brackets) it does not say what s17 says, rather it says what I contend for. That is to say, it does not say "where the consideration for the acquisition is....".
It says "where the amount of the consideration for the acquisition is..."
I am not skipping over anything. I merely say that the draftsman, who wrote both sections, seems to have believed that s17(1) fixed "the amount of the consideration".
I don't think there would be any disagreement, that if that is what s17(1) actually said, there would be no doubt that s280 could apply.
I think I have previously stated my position as regards interpretation. If the words produce an absurd result you look at intention and interpret the words used, so far as possible, to avoid that absurdity. This is particularly so when the absurd result arises as a result of applying a deeming provision.
In my view, there is a tenable argument here that the result is absurd and not what parliament intended. The legislation can be read in such a way as to give the "correct" result and that reading does not "stretch" interpretation.
Sadly, we know it will not be litigated and unless someone challenges HMRC about their guidance, in connection with a real case ( they don't do hypothetical) we never will know. Still, a very interesting diversion.

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