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IHT and CGT implications of cash and property

IHT and CGT implications of cash and property

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My client,  5 years ago was gifted £150K cash (properly documented and a PET) by his father.   My client buys a rental property, which is now worth £200K. The father now wants to move back to the UK and wants to live in the rental property, which he sees as his own because he had "paid" for it.   My client is considering gifting the property back to his father.  However, I have warned him that it would be a PET and that there would be CGT on the £50K gain with possible GWR and POAT implications.  What would be your best advice?

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By Tax Dragon
18th Jun 2019 15:49

Accountants have to know their limitations. You have reached yours, so it's time to buy in the services of a capital taxes specialist.

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By Accountant A
18th Jun 2019 15:57

Quote:

What would be your best advice?

My advice would be to follow the site rules:

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By Tax Dragon
18th Jun 2019 16:07

Quote:

Any abuse of the ability to publish anonymously will not be tolerated and offending users will be banned from AccountingWEB.

Presumably, this happens a lot. I mean, Sift has its good reputation to defend, so it would always do what it says it will do.

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Bramble
By Chris.Mann
18th Jun 2019 17:14

"What would be your best advice?"

It would be interesting to know what your thoughts are.

This appears to be a can of worms waiting to explode, if you are not extremely careful. As one has suggested below (probably above), we all have to acknowledge our limitations.

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By ireallyshouldknowthisbut
18th Jun 2019 18:41

My advice would depend on the circumstances ie
1. Your clients intentions and wishes
2. His fathers intentions and wishes
3. The family view on IHT and asset distribution
4. The father's potential estate
5. Trade off of PPR relief vs CGT on transfer

You name it, there is going to be a lot of meat to it to go through, with no one right answer at the end.

My advice would be get paid upfront!

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By mustardtree6
18th Jun 2019 22:05

My advice is to seek Counsel's opinion on this one.

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Replying to mustardtree6:
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By Tax Dragon
19th Jun 2019 06:33

Whatever the OP's client's father's expectations, and for whatever reason he has such expectations (I have my suspicions, but these are based on direct personal experience of that kind of thinking... I should not assume that my experience is relevant)....

Anyway, whatever his expectations, Daddy needs to understand that UK tax principles are in accordance with UK law. If he has no basis in UK law to a claim in the property (and you say the documents show he hasn't), then it follows that there are UK tax consequences to his proposals.

I think some form of counsel may be appropriate; I wouldn't be advising going to Counsel... but again, I'm risking making assumptions there based on personal experience.

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