richardg

I wonder if there are any tax experts or people with CGT experience on here who could answer this for me please?

If I were to buy a property from someone who will (without a shadow of a doubt) have a CGT liability when the sell, when is the CGT payable? ie when is the "taxable supply" deemd to have been made - at exchange of contracts (as in the point where I am legally committed to the transaction) or completion (when the vendor's money is in the bank)?

I understand it to be the point at which the taxable supply is made, ie if you invoice for a service, you can't leave the VAT off and then invoice the VAT later - does the same principle apply here?

TIA

D1CCY

You pay the price for the property as if there was no CGT issue. Its all the responsibility of the vendor to declare his gain at the end of the tax year and cough up to Alisdair/Gordon then. Vendor can sit on the money till the end of the tax year.

fast bloke

The liability (on property) occurs when contracts are exchanged, so if you exchange now and complete on 6th April, the CGT liability for the vendor falls into the 07/08 tax year.

I have come across cases where people have bought half now / half next tax year, minimising stamp duty and doubling up on CGT allowances. I wouldn't be entirely sure that IR would be happy with that though.

The Snug Rhino

If that were me i'd up the price of the second half once i tied them into the first!

fast bloke

That is the main problem with it - It has to be done on trust as you can't have a written contract of any description, but you can only win if the other guy wins. If he can't buy or wont sell the second half, you will jointly own a disputed asset. No-one has a bigger stake, so the lawyers will take both of your money pretending to sort it out.

(That said, when there is 500k at stake, it takes big ***** to reach an agreement on a handshake )

The Snug Rhino

you've been shaking hands all wrong.

richardg

that's what i was led to believe - i am putting a deal together which leaves the vendors with a significant CGT liability (so I am informed) and if I understand their requirements (and the leve of their potential tax bill), i should be able to put together a deal that works for all of us.