Specific CGT question
Discussion
This is for a friend, seriously.
Said friend is divorced and paid out 70% of his net assets on divorce. He also pays maintenance for his kids which covers their expenses comfortably. He had some sort of final deal with his ex whereby he does not pay spousal maintenance.
Said friend has a signed banksy piece which is now worth 40K+. He wants to sell it and minimise his tax liability. He bought it for £750 in 2011 ('choose your weapon' for those interested in the title of the piece)
He wants to transfer ownership of the piece into five different people's names who then sell it. Because each equal share is worth 8k, there will be no CGT to pay and because they are receiving the money, there is no additional child maintenance to pay. They then gift him the money and don't die for 7 years. He asked me if I thought this would work out for him and them. Those 5 people won't have made any other capital gains in the year they make the gain on the banksy.
I was not sure. I know his wife to be a particularly nasty piece of work who makes him pay through the nose for supervised 2h contact at a contact centre. There is no history of violence, she's doing it because she can. So I can see why he is doing this.
So what does the PH collective think? To reiterate, for anyone thinking of writing abuse, this is not me but someone close to me.
Said friend is divorced and paid out 70% of his net assets on divorce. He also pays maintenance for his kids which covers their expenses comfortably. He had some sort of final deal with his ex whereby he does not pay spousal maintenance.
Said friend has a signed banksy piece which is now worth 40K+. He wants to sell it and minimise his tax liability. He bought it for £750 in 2011 ('choose your weapon' for those interested in the title of the piece)
He wants to transfer ownership of the piece into five different people's names who then sell it. Because each equal share is worth 8k, there will be no CGT to pay and because they are receiving the money, there is no additional child maintenance to pay. They then gift him the money and don't die for 7 years. He asked me if I thought this would work out for him and them. Those 5 people won't have made any other capital gains in the year they make the gain on the banksy.
I was not sure. I know his wife to be a particularly nasty piece of work who makes him pay through the nose for supervised 2h contact at a contact centre. There is no history of violence, she's doing it because she can. So I can see why he is doing this.
So what does the PH collective think? To reiterate, for anyone thinking of writing abuse, this is not me but someone close to me.
ellroy said:
The transfer to the 5 people would normally be viewed as a disposal for CGT purposes, irrespective of if money changed hands, and so the whole scheme falls flat at that point.
HMRC are not that dumb!
Fair enoughHMRC are not that dumb!
But then he will say he will transfer it for some nominal sum. Say 1k. What then?
They look at it based on market value, so something like a Banksy would again be fairly obviously being sold on the cheap and the scheme again falls flat on its arse. If your pal wants to play tax evasion, for that’s what it is, tell him to feel free.
I’d steer well clear personally.
I’d steer well clear personally.
I do love these "smart" people.
Market value will be taken - end of discussion.
Anyway - if this scheme even worked everyone would do it wouldn't they?
What part of the painting do them 5 people own? HMRC will straight away ask who bought it if investigated.
You have to use market value on gifts - which essentially this is (to 5 people). He will still have to pay the tax, still have to declare the gain, still pay the wife a few bob.
To me not worth the risk, you could get away with it by just saying you sold a painting, and may get off scot free, but at the same time could get a number of people into hot water being part of a scheme which is avoiding tax.
If he wants to run the risk of potentially giving HMRC double the gain in tax and penalties and maybe have his affairs looked at for x number of years tell him to knock himself out. End of the day its his affairs, and not much to do with us.
Market value will be taken - end of discussion.
Anyway - if this scheme even worked everyone would do it wouldn't they?
What part of the painting do them 5 people own? HMRC will straight away ask who bought it if investigated.
You have to use market value on gifts - which essentially this is (to 5 people). He will still have to pay the tax, still have to declare the gain, still pay the wife a few bob.
To me not worth the risk, you could get away with it by just saying you sold a painting, and may get off scot free, but at the same time could get a number of people into hot water being part of a scheme which is avoiding tax.
If he wants to run the risk of potentially giving HMRC double the gain in tax and penalties and maybe have his affairs looked at for x number of years tell him to knock himself out. End of the day its his affairs, and not much to do with us.
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