Capital gains tax planning for properties
This client came to us seeking advice on mitigating capital gains tax on a property. We considered the client’s personal and professional circumstances in detail and explored various options allowing for the potential tax liability to be mitigated. We finally developed a strategy using legislation, HMRC’s guidance and extra statutory concessions which if carefully implemented would allow for the majority of the capital gains tax liability to be eliminated.
Our analysis: This was a complex case and required specialist knowledge of the legislation and HMRC guidance on various reliefs and exemptions. Seeking tax advice from a specialist firm may cost a little but the tax savings are very much worth it.
Positive ruling from HMRC on capital gains tax liability
This client came to us on recommendation from East London. The client had transferred a property to their relative as part of an ongoing internal family arrangement. On the face of it, there was a transfer between connected people and therefore subject to a substantial capital gains tax liability. We considered the case and background and found that the person to whom the property was transferred had retained beneficial ownership of the property throughout the period of ownership by the nominee owner and that there was a deemed trust in place. We discussed the idea with our client and applied to HMRC for a ruling that there was no tax to be paid considering the structuring of the ownership. After waiting for approximately 8 weeks, we received a positive ruling from HMRC confirming that our technical analysis of the ownership structure and of deemed trust was correct and therefore no capital gains tax was payable. This was great news for our client as a potentially substantial tax liability was no longer payable in accordance with the tax legislation.
Our analysis: This was a complex matter and required in depth specialist knowledge of the tax legislation and legal/ beneficial ownership structures. Whilst a tax specialist will no doubt cost more than an ordinary accountant but can bring much larger savings in tax. In this case the additional fee was a fraction of the tax savings brought for our client.
Probate valuations and Capital Gains Tax
This case was referred to our firm by another firm of accountants in London. The client had inherited some properties a few years ago that they wanted sell. The issue was that the valuation used for probate purposes was quite low compared to market value at the time of death which meant that the capital gains tax on sale would be significantly higher. Our team of tax specialists took on the case an applied to HMRC’s valuation team to get a correct valuation. HMRC initially objected to our proposals but having provided sufficient supporting evidence comprising property valuations and sold prices, we were able to agree a figure with HMRC that was much closer to our initial proposal. The agreement by HMRC’s valuation office meant that our client’s capital gains tax liability was reduced to a fraction of the initial figure before we took on the case. The client was over the moon with the savings.
Our analysis: At the time the case was referred to us, our clients or their accountants had not even thought about getting a valuation agreed from HMRC’s specialist unit in order to reduce the liability. Due to our long running experience in our dealings with HMRC, this strategy was discussed with the client and they were quite happy with the idea. The tax savings achieved by our client were far higher than their expectations. It is always a good idea to seek advice from a tax specialist as this can bring substantial savings compared to costs.