Assets gained in divorce to escape CGT
In a sudden about-turn by the Inland Revenue, assets transferred under a court order in matrimonial proceedings will no longer be subject to capital gains tax.
Link: CGT windfall for company execs
The Inland Revenue has reversed its policy following pressure from lawyers and tax practitioners.
Typically, CGT was charged when shares in a family company were passed from the husband to the ex-wife or visa-versa.
The Revenue was swayed by a matrimonial judgement handed down in July 2002 in the High Court, when judge Coleridge said the Revenue’s view on this matter was based on misconception, top 20 firm, Saffrey Champness, claimed.
The new ruling is restricted to asset transfers on or after the 31 July 2002, or cases unsettled at that date.
Peter Horsman, national tax partner at Saffery Champness said: ‘They appear not to be allowing past cases to be corrected, presumably on the grounds that, prior to that date, it was “practice generally prevailing” at that time.’
‘This does not seem to be fair. The incorrect practice was generally enforced by the Revenue, waving their big stick, but openly doubted and disputed by matrimonial lawyers and tax advisers. Accordingly, the Revenue’s intransigence on not allowing the correct treatment in past cases is to be regretted and may be challenged.’