CGT on a Property that was gifted to siblings 25 years ago and Mother lived in rent free leasehold

mta999

On the positive side I am sure your mother will have got a lot of pleasure during her lifetime imagining she had got around the rules so to speak

poseidon1

Keep_pedalling said:

poseidon1 said:

senor_naranja said:

Thanks for all your comments thus far, IHT does not really have a bearing as the property is only worth around £250K and Mum only had around 40K in the bank.

We have exchanged this week and look to complete next week , the lease  having been removed by the land registry following a notice period issues by us the freeholders(4 weeks)

I think I shall have to seek some professional advice as suggested but we only have 60days unless I can get some sort of stay of execution on submitting the CGT and I guess I ask the tax office about that?

J

I do not imagine for one moment your widowed mother dreamt up this arrangement herself. I feel certain a solicitor would have been involved and indeed may have been responsible for advice and implementation. Indeed it may even have been an arrangement pre discussed and agreed  with your father and then executed post death.


Is there no paperwork , report, advice letter ( anything tangible), that could assist an accountant in ascertaining a base cost for the property following the grant of the lease?  In any event, the starting point will be probate value of the property at date of your father's death which could potentially be used to estimate the gain for intial reporting.

Any underpayment of tax will attract interest, but penalties are most unlikely in these circumstances especially if the return is submitted by an accountant on your behalf.

Given the very modest value of the property now, it is difficult to the comprehend what purpose this silly arrangement was designed to fulfill.

It may have been one of those companies who also sell expensive but useless trusts after scaring people about care costs. It would clearly be utterly useless as a means of reducing a non existent IHT liability, and no doubt they charged a nice fat fee and are the only people who benefited from this pointless process. 

Possible but extremely unlikely.

All the Ingram carve out schemes I encountered for review or unwinding created from the late 1990s through to  early naughties,  were solicitor created schemes  targeting IHT avoidance, and often sold to those firms by a particular large central London firm known for aggressive IHT mitigation schemes.

However, given the profile of this OPs family ( with all due respect ) it made no sense at all that they would be considered suitable clients to even discuss this scheme with.

A sad situation.


Ps. To be noted lease carve out  schemes still exist and work, but only in the context of valuable chattels such as works of art, antiques etc.  This gives a flavour of the correct target market.

Keep_pedalling

poseidon1 said:

Keep_pedalling said:

poseidon1 said:

senor_naranja said:

Thanks for all your comments thus far, IHT does not really have a bearing as the property is only worth around £250K and Mum only had around 40K in the bank.

We have exchanged this week and look to complete next week , the lease  having been removed by the land registry following a notice period issues by us the freeholders(4 weeks)

I think I shall have to seek some professional advice as suggested but we only have 60days unless I can get some sort of stay of execution on submitting the CGT and I guess I ask the tax office about that?

J

I do not imagine for one moment your widowed mother dreamt up this arrangement herself. I feel certain a solicitor would have been involved and indeed may have been responsible for advice and implementation. Indeed it may even have been an arrangement pre discussed and agreed  with your father and then executed post death.


Is there no paperwork , report, advice letter ( anything tangible), that could assist an accountant in ascertaining a base cost for the property following the grant of the lease?  In any event, the starting point will be probate value of the property at date of your father's death which could potentially be used to estimate the gain for intial reporting.

Any underpayment of tax will attract interest, but penalties are most unlikely in these circumstances especially if the return is submitted by an accountant on your behalf.

Given the very modest value of the property now, it is difficult to the comprehend what purpose this silly arrangement was designed to fulfill.

It may have been one of those companies who also sell expensive but useless trusts after scaring people about care costs. It would clearly be utterly useless as a means of reducing a non existent IHT liability, and no doubt they charged a nice fat fee and are the only people who benefited from this pointless process. 

Possible but extremely unlikely.

All the Ingram carve out schemes I encountered for review or unwinding created from the late 1990s through to  early naughties,  were solicitor created schemes  targeting IHT avoidance, and often sold to those firms by a particular large central London firm known for aggressive IHT mitigation schemes.

However, given the profile of this OPs family ( with all due respect ) it made no sense at all that they would be considered suitable clients to even discuss this scheme with.

A sad situation.


Ps. To be noted lease carve out  schemes still exist and work, but only in the context of valuable chattels such as works of art, antiques etc.  This gives a flavour of the correct target market.

Have just had a look at this scheme it seems even odder that it was done in 2001which is 2 years after the loophole was closed for property.

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm44100