Possible POAT or just a PET

Trusts Discussion
1

A new client came to me to catch up with her income tax affairs for the last four years since she returned to the UK to live from Eire.
She mentioned that she purchased her home in joint names with her daughter.
I suggested that she check with the solicitor to advise whether there has been a gift with reservation or should a POAT be considered.
She subsequently explained that her daughter took out a mortgage on her flat in London and provided about one half of the purchase monies for my client’s home because there was a delay in the sale of my client’s previous home in Eire.
When my client’s previous home was sold she ‘repaid’ her daughter but her daughter’s name remains on the title of my client’s current home.
In the absence of a loan agreement between mother and daughter it seems to me that daughter acquired a half of mother’s house and mother subsequently made a cash gift to her daughter.
Would others agree with this analysis?
As a consequence, would POAT be in point?
If so, what approach should be taken in assessing any liability?
The figures are not large: the house cost about ÂŁ120k and my client has spent another ÂŁ50k or so on improvements; the rental value of the property might not be as much as ÂŁ5k per annum.

Kevin Preston
Amherst & Shapland Limited

2

It appears that daughter lent her mother half the price and has now been repaid. She was only on the title for security purposes and should now come off. Alternatively daughter owned half and that has now been bought back by mother, so again daughter should come off the title; if this is the case cgt and sdlt need to be considered.

As always it depends on what was in the documentation/solicitor’s instructions/parties’ minds. Either way, try to simplify the situation.

Simon Northcott

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3

As always depends upon the parties’ intentions.

On the face of it the daughter simply helped mum finance the purchase by way of a loan which was then repaid. Lack of loan documentation not a problem as evidence of this fact is supported by the mother’s repayment as soon as her house had sold.

As Simon says mother’s name needs to be removed.

I assume daughter doesn’t live in the house.

Malcolm Finney

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