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Where Taxpayers and Advisers Meet

Reversing Gift

vik2001
Posts:72
Joined:Sat Nov 17, 2012 2:24 am
Reversing Gift

Postby vik2001 » Sat Jan 25, 2020 4:41 pm

Hi
i got myself into a pot of bother. Ive had it confirmed via lesiglation to me that the gift made to me by mother as joint tenants, isnt eligble as sharing terms ( we both live there). It had to be tenants in common as thats the only way to get a true undivided share, and get out of the clause of paying rent. then we could have shared bills equally, etc

now the questions.
1. is there anyway to reverse the gift?
2. i was told if we change it to tenants in common now by severing, another 7 years will kick off as the current gift is a GROB.
3. With the current arrangements being invalid can we get hit by a POAT charge if we left it as it is.? the property is worth only £400k so if it fell back into mothers estate not end of world, but being hit by POAT as we both live there would be....

taxplanet
Posts:30
Joined:Wed Aug 06, 2008 3:51 pm

Re: Reversing Gift

Postby taxplanet » Wed Feb 05, 2020 7:23 pm

I am not convinced that the advice that you have been given is correct - see for example the HMRC guidance at

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14332

discussing GWR where no distinction is made between joint ownership as either joint owners or tenants in common

and here

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14360

which confirms that FA 1986 S102B makes no such distinction

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Reversing Gift

Postby AGoodman » Fri Feb 07, 2020 2:50 pm

I don't know the answer to this one - the HMRC guidance appears very helpful but still leaves a loophole; it keeps referring to "joint ownership" which could in theory include tenants in common as well as joint tenants. I don't think they are being tricky, I think they probably genuinely intend to include both forms of joint ownership, but it's a shame they don't state this.

taxplanet
Posts:30
Joined:Wed Aug 06, 2008 3:51 pm

Re: Reversing Gift

Postby taxplanet » Fri Feb 07, 2020 3:00 pm

If the legislation at FA1986 s102B had wanted to restrict the relief to only property owned as tenants in common it would have said so. I would be tempted to go back to those who provided the advice to ask them what they believe the statutory, or case law, basis for their opinion to be.

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Reversing Gift

Postby AGoodman » Fri Feb 07, 2020 3:05 pm

Actually, the first instance refers to transfers into "joint names...equally" throughout. The "equally" strongly implies tenancy in common. The second just refers to "joint names".

It's very ambiguous and I don't think I would like to rely on it.


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