Member Since: 23rd Nov 2013
20th Dec 2020
I agree with the thoughts behind the question which I have often pondered on myself.
Government and Bank of England are essentially one and the same thing like a married couple.
The old fashined description of QE was "printing money" (in the old days of notes and coins) now it is "issuing credit". Trouble is last time (2008) little of it ended up in the hands on the consumers (instead it went to institutions, pension companies, rich private individuals, foreign governments) so it was pretty pointless. Hopefully this time via furlough, SEISS etc at least some money is finding its way to consumers.
The old theory was increase the money supply, this geberally caused inflation which in turn reduced the real value of the government debt created. Inflation seems a long way off at the moment.
Currently the BofE owns about a third of the government's debt. Around 650 billiuon.
Using the husband wife analogy which I've used before. If husband owes wife £1,000 and wife decides to waive repayment then as a couple they are no worse or better off.
A bit more complicated with BofE and Govt because there are other parties holding debt who may be upset if BofE waived repayment of government debt and the theory runs that this could then cause a run on the pound and exchange rate problems .. who knows?
As most countries have had to do the same as the UK and as Covid is a worldwide problem maybe all countries should just get together and clean the slate of worldwide debt and start again. No doubt debtor nations will be upset but we're all in this together.
I'm sure it probably isn't as simple as that but then all the complicated solutions dreamt up by our economists (and our scientits) don't seem to be working.
16th Dec 2020
Thank you RT for your detailed and very helpful analysis from which I conclude my client does not need to refer to the sale of her PPR on her tax return at all (not even in the white box - so I will tremove the white box note).
I believe there is sufficient weight of evidence for her to claim full PPR for the full period of ownership (including the fact it was her only residence for 15 years out of the 20, her son lived there throughout the full 20 years as it was the family home, GP and Dentist were close by, the house was very close to her work place, all banks corresponded to the house until date of sale, as did HMRC, DVLA, BUPA, car insurance, solicitors etc., all her suppliers used that address etc etc - she provided more than an A4 sheet of information to back up her residence).
The house she did occupy for 50% of the time after 2015 she did not own, was 15 miles from her place of work and very little correspondence went to that address.
I think it would be disingenous of HMRC if they tried to argue that the original house was not her main residence throughout the whole period of ownership.
16th Dec 2020
Thank you for the feedback. Seems to me opinion is indeed split in terms of what to put on the tax return.
Not sure how the gain can be "exempt" rather it is a chargeable gain but the tax to pay is NIL because of the claim for PPR
8C that says if the gain is over 4 x the annual exempt amount then at least a statement should be made on the tax return. Reading 8C I'm not sure leaving it off completely would be correct.
I'm leaning towards a white box note saying something like "I sold my main residence in January 2020 which I consider was my PPR throughout my period of ownership from 2000 to 2020 therefore any gains made on the sale of that property are fully relieved from any CGT"
17th Sep 2020
Many thanks. I agree. I decided to call a specialist advice line and they said same on VAT and Corporation Tax. Luckily no profits made to date and not reached compulsory VAT threshold yet but going forward they definitely need Gernam tax and accounting advice! Thank you
2nd Sep 2020
Thanks Jon. Have referred the query to a specialist in this area. Will advise any feedback
1st Sep 2020
Thank you Jon. It looks like he is going to have to hope he claim 60 exceptional days for being stuck in the UK from April till July.
Can the 60 exceptional days also be used against the 91 days of continuous accommodation available. So lets say he had a place made available to him by his friend for 140 days but 60 of these were during the exceptional days period would this possibly allow him to stay under the 91 days?
1st Sep 2020
Thank you Red Leader
1st Sep 2020
Thanks Jon. I don't think he meets automatic overseas test in the current year. He has lived in Middle East for several years and plans to for the foreseeable future. He has permanent accommodation out there. He has just been stuck in UK for a lot longer than anticipated because of Covid and flight cancellations from late March (when he came to UK for a short visit to see his kids) to early July.
He ended up renting a temporary place through a friend (on an ad hoc basis not on a 6 month lease or anything like that) in the UK for over 91 days (so I wonder if that creates a tie in UK even though he has a permanent place in the Middle East?).
I understand the 2 minor kids might represent one tie (not 2).
If he has just 1 tie in the UK (the minor children) then hopefully he would get up to 183 days allowed in UK plus (also hopefully) 60 exceptional days in which case he might be okay.
Not an area I come across much hence uncertainty. May need to refer him a to a specialist in this area as the numbers are quite large.
25th Aug 2020
Trying to give the best advice I can. I have spoken to a specialist adviser too to try to understand but I still feel uncertain.
I had a look at S222 (7). The date of the first acquisition was 2011 and it was his PPR from 2011 to 2016. I did not advise on the transfer of part of the propertry to his spouse in 2018.
The legislation does not seem to cover the specific situation of a property being transferred from spouse to spouse then back again. I would have thought asset transfers between spouses were pretty common and not a particular problem.
I looked at the Ramsay case which doesn't appear to give a definitive answer in terms of what is and isn't artificial steps to reduce tax. The adviser I spoke to indicated it would be difficult to know how HMRC would interpret this situation and certainly no guarantee could be given to the client on this.
Just not sure on the specific information here whether HMRC, if they picked up on it, would view it as artificial steps to reduce tax.
In terms of the order of things the client is trying to decide whether it is better for them to carry on renting the property out or to sell it. So the decision to sell has not been made yet. They have just asked me what the tax position might be if they sold now and if there are ways to minimse any CGT.
24th Aug 2020
Many thanks Tax Dragon that's very clear.
My other thought then would be could she transfer her share back to her husband before they sell the house in Manchester in which case he might then be able to claim the full PPR relief up to mid 2016 when they started to rent out.