NRCGT rules and estates

Trusts Discussion
1

A non-resident residuary legatee assigns his interest in residue outside the 2 year DOV period, so it is not retrospective for CGT purposes, prior to 6.4.15.

HMRC considers in their manual that no effective disposal of a chose in action has taken place as no consideration was paid, and the disposal to the donee will not be effective until the asset vests in the legatee. At that point the legatee takes the asset
at date of death value and disposes of it at market value. No grant of probate has yet been obtained.

As he is still non-resident, will the disposal be treated under the NRCGT rules as a disposal of an asset acquired by the legatee prior to 6.4.15, so rebasing will apply, or an asset not acquired for the purpose of these rules until it vests in him as legatee?

Simon Northcott

2

If I understand HMRC’s views correctly as set out in their CGT Manual, their view is that where there is no valuable consideration an assignment can only take effect once there are specific assets that the legatee can assign which is only reached when assets vest from the estate to the legatee (ie normally when the residue is ascertained; CGM 32000). Re-basing for non-resident CGT purposes requires that the relevant asset must be held (ie beneficial ownership) on the date of the re-basing. Thus, if vesting according to HMRC only takes place when the asset vests in the residuary beneficiary, which is post April 2015, re-basing will not apply.

Malcolm Finney