Heres the scenario
Client wanted to help their son buy a house - they had to do this as an unencumbered cash gift. At that stage it was a PET. Son is now paying them back the money from an unassociated house sale. So my thought is they have turned the PET into a gift with reservation of benefit, agreed? And the money is still in their estate, unless of course they give it back again as an unencumbered gift in which case a new 7 year clock starts again.
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The client GAVE the son some cash. The son GAVE the client back some cash. There's no GWROB. There are two PETs with two donors.
Or one might simply argue that the reality of the situation was that it was a loan, such that no value ever left the client's estate.
Couldn't agree more (with all comments!). If the loan from Bank of Mum and Dad is towards a deposit and there is a mortgage, the mortgage company will insist on an outright gift (witnessed by a Deed of Gift or signed letter). If, however, the child wishes to pay the parents some money at a later date then that is a totally different and a separate gift (not necessarily needing to be legally documented). It's happening to me just now (father and son both CAs!)
.in answer to your question.....'....when its a loan!'
Geez anonymous....really was the scenario that difficult to comprehend....
Client told you this but didn't tell you (whether) it was a loan? You have the worstest clients, Anonymous. Only ever tell you half the story. How do you ever manage to comment on the tax(es)?
In this case, if there was a GWROB, it would not be in the money. It would be in the property bought - but para2(1) applies, to prevent this. The POAT rules are of course very different (else they would never apply, would they?)
But do try to get the full facts for your next OP, please.
If you quote paragraph numbers then I think you should say from which schedule to which Act of Parliament the paragraph comes.
This is a case of a gift with presumption of advancement by father. Subsequent events cannot recategorise it as a loan. See:-
warren-v-gurney-ca [1944] 2 All ER 472.