Passant v Jackson - estate CGT


I have been looking at a query concerning an asset transferred to a residual legatee but the legatee has provided the Estate with consideration as the probate value of the asset was in excess of the net estate. E.g. Asset worth £100,000, mortgage £20,000, net Estate £80,000 but legatee settles mortgage in return for the asset.

Although I understand the legatee’s position (that their base cost is the probate value and the ‘consideration’ paid is disallowed for CGT purposes), I can’t get my head around the personal representatives’ position. HMRC’s manuals at CG31175 state that it should not be accepted that the transfer of the asset is covered by s64 TCGA 1992. So does that mean that the personal representatives have a gain of the consideration received or is there something more to this?

Any input would be gratefully appreciated as I seem to be going round in circles!

Jo Hamilton
Tax Manager
Howard Worth Chartered Accountants