Capital Gains Tax

Brett

In November next year(2010) I am to receive a sum of money the proceeds of an Investment in a land development in Argentina. The proceeds will consist of my initial investment (A) and the proceeds of that investment (B). The money will be returned to me via an Investment Company here in the Uk, whose fees I have already paid. I need to know firstly, will the UK Tax people tax me on A + B or only on B. I have been told that the tax due will be 18%, but that I am allowed an allowance on any such gain before CGT, that allowance being £10,000? Secondly, what options are open to me to LEGALLY avoid paying the full tax bill and would anyone suggest and recommend a good Tax Accountant in The Liverpool/Chester/Manchester area of the UK or should I just contact HMRC and advise them accordingly?. Please take into consideration, I have never been involved in this kind of Investment before, its a whole new ball game for me...Cheers in advance. Brett

Elaine_Wilson

Ok, answers to the simple questions first. CGT is at 18% and you do have an annual exemption, currently £10,100. Also the chargeable gain is the actual profit, so in your example would be B only (ie A+B minus A)

But I'm a bit worried by some of the terms you have used so clarification would be a good idea.

You mention a land development. This jumps out as a possible trading venture rather than an investment so CGT may not apply.

Secondly, is it actually you that is investing in this venture? You mention a UK investment company. Are they acting as your agents or are they running an investment scheme? In other words we need to establish exactly what asset you have bought. Is it a share in an Argentinian venture, shares in an Argentinian company, shares in a UK investment company or something else?

If you can give more details of this investment without giving away any personal information it would help. As a matter of interest if this is your first foray into this type of investment what made you do it? Whose advice did you take and what do they say about the tax consequences?

Brett

Hope my reply came through Elaine? Tried twice

Brett

Seems not..will try again

Brett

Its an Investment in a land Development through an Investment Company in Brighton. The Developer is in Luxembourg and the deal was to put a 50% deposit in US Dollars into a Development in Central Argentina to develop a 5 Star Hotel and Spar, Signature Golf Course and Winery.3 yrs later after quarterly reports from Developer make an educated decision whether to opt for the further 50% purchase on the acre of land or go for the 'buy out' option and receive 100% back on your initial investment. Development 9 months ahead of schedule and in view of this decision made to go for the buy out option which will be paid in US DOLLARS. UK Investment company dont want to involve themselves in Tax Implications as they say everyones circs are different. Hope these answers help. You advice much appreciated. Brett

Elaine_Wilson

You've paid money to a company in the UK. They can't just choose to abdicate any tax responsibilities so assuming they are above board then they are just a money transmission agent.

It seems you have bought land in Argentina. There should be some deeds or equivalent to confirm this. I'm not clear whether your money is being used to fund the development which might make it a trading venture so I'll assume not. Then land is an asset where any gain is subject to CGT so the information you had at the beginning is correct.

The fact the payment is in dollars should not really confuse the issue unless you decide to leave any of the proceeds in dollars for a length of time.

Also the land being in Argentina will still leave you liable in the UK if you are resident here. There may be some Argentinian taxes to pay as well.

This is getting well outside my areas of expertise. I hope someone else can offer some advice. In any event I would get professional help as soon as possible.

Brett

Elaine, I really appreciate your thoughts on this..thanks for the imput. Regards, Brett