Where Taxpayers and Advisers Meet

Damages & compensation

Milbo
Posts: 37
Joined: Wed Aug 06, 2008 4:07 pm

Damages & compensation

Postby Milbo » Thu Apr 20, 2017 1:09 pm

My client owns a house which is neither his PPR or rented out.

A developer has offered £750,000 for the house which will be demolished and for the development. The offer has been accepted and it has been suggested by the Chartered Surveyors that it may be necessary to split the consideration into (a) consideration for the property which is valued at £400,000 and (b) any damages for loss that may be non-taxable of £350,000.

The damages are said to cover rights of light and other development dependencies i.e. crane overhang, site cabin on the land, inconvenience. If the property is sold before the development has started and no light has been lost during ownership, how can my client be entitled to compensation for his loss of right to light and use of the land etc? Am I missing something?

If the damages are included in the sale agreement, are HMRC likely to agree that they are non-taxable?

Many thanks,

maths
Posts: 6475
Joined: Wed Aug 06, 2008 3:25 pm

Re: Damages & compensation

Postby maths » Thu Apr 20, 2017 6:09 pm

I'm always willing to learn but must confess to not having a clue what the surveyors are talking about.

bd6759
Posts: 2021
Joined: Sat Feb 01, 2014 3:26 pm

Re: Damages & compensation

Postby bd6759 » Sat Apr 22, 2017 11:26 am

It seems like the developer is trying to keep the cost below £500,000 for SDLT and ATED purposes.

I presume your client does not own any neighbouring land that could be affected by the development.

Milbo
Posts: 37
Joined: Wed Aug 06, 2008 4:07 pm

Re: Damages & compensation

Postby Milbo » Mon Apr 24, 2017 10:00 am

Thank you both.

The land and building will be sold in its entirety with nothing retained in the vicinity.

I have been further informed that the client's property will be subjected to actionable infringement by an adjoining development that would give rise to a claim to damages had he retained ownership. As the client has agreed to sell, the settlement represents the market value of the property and an amount on account of damages that the developer would otherwise have likely had to pay.


Return to “Capital Gains Tax, CGT”