TGCA section 248(A)

I act for A and B who are brother and sister and who own a number of houses and cottages in their joint names. They acquired the properties in 1992 when the younger of them attained the age of 25. However, B holds her share of the properties as nominee for the trustees of a voluntary settlement made by her, of which she is the life tenant, and and all income and capital gains have been returned to HMRC by the Trustees of the settlement, as a settlor-interested settlement.

A and B now wish to divide the properties between them so that 50% by value will be transferred into their separate ownership, and B would prefer her share to be transferred into the names of the Trustees. Relief under section 248A is essential to ensure that no CGT is payable when the properties are divided between them.

There are five conditions in the section and it is clear that the transaction complies with conditions A-C and E. Condition D is that A and B must each become “the sole owner of one or more of the holdings”., and I am not clear if this applies (a) if B becomes the sole registered owner where she is holding the properties as nominee for the Trustees of her Settlement or (b) if the trustees become the registered owners, even though there are more than one of them, as they are treated as a single and continuous body under s69(1). It does appear that the condition would definitely apply if the properties were transferred to a trust corporation.

Does anyone have experience of this situation or of the way HMRC treats such transactions, or be able to advise on the legislation.

John Randel - Lee Bolton Monier-Williams LLP

TCGA 1992 is all about beneficial not legal ownership. S248A(1) refers to “holding of land” “jointly held”.

S248A(7)(b)(i) refers to holdings of land as joint tenants or tenants in common and thus must be referring to beneficial ownership.

I therefore suggest that Condition D which refers to persons holding the beneficial interest which on a disposal in principle would give rise to a CGT charge means A and B’s trustees.

Hence if post the reconstruction B’s trustees hold the shares (not B) Condition D is satisfied.

The above is my view and have not had direct experience of s248 and HMRC.

Malcolm Finney

Thank you Malcolm – that was my view also, but it would be good to have certainty before proceeding and HMRC have not been willing to give a non-statutory clearance, because they do not believe there are genuine points of uncertainty.



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