Analysis
Zoe Hamar (Z) was notified of an assessment to capital gains tax (CGT) for 2002/03 under s282 of the Taxation of Chargeable Gains Act (TCGA) 1992, in a letter dated 18 August 2009. Prior to that date she had been unaware of the liability that arose from her father, Mr Rogerson (R)’s transfer of three flats to her, one in 2001/02 and two in 2002/03. These transfers gave rise to a CGT liability which was unpaid at his death in June 2003. Following an enquiry by HMRC into R’s tax returns, an amendment was made to his 2002/03 return on 25 July 2007 and, although payment of the liability was agreed by the executor, it remained unpaid. Since the tax due on the gift had remained unpaid for at least 12 months, HMRC sought the amount due, plus interest, from 2002/03 from Z as donee. Z appealed, arguing that the assessment was not properly made for 2002/03, but should have been raised for 2009/10.
Held (appeal allowed (para [20]))
Although s282 TCGA referred to a chargeable gain accruing to any person in ‘any year of assessment’ and any amount of CGT assessed on that person ‘for that year of assessment’ remaining unpaid for 12 months, it continued by making provision for the donee of an asset, received by way of a gift, to be assessed and charged to CGT. The assessment made under s282 TCGA on the donee, although derived from the assessment on the donor, was a distinct and different assessment from that on the donor, and s282 TCGA did not specify the year for which the assessment on the donee should be made. The absence of any reference to a year of assessment in respect of the assessment on the donee in s282 TCGA, which could have been included if it were intended to be the year in which the donor made the gift, led to the conclusion that the assessment should only apply from the date, and therefore for the year, in which it was made. This conclusion obtained support from s282 TCGA itself which gave the person responsible for payment of the CGT a statutory right to pursue the donor for ‘any amount of tax in pursuance of this section’ and from the absence of any provision for the reclaim of any interest paid unlike the position under s189(4) TCGA in respect of a company share holder which provides that ‘he shall be entitled to recover from the company a sum equal to that amount [of tax] together with any interest paid by him…’ (para [16]). A consequence of this omission was that any charge to interest on the unpaid CGT, against which there was no statutory right of appeal could only be made from the date and in the year the assessment was made (para [18]).
As the s282 assessment was made on 18 August 2009 it followed that it was made for 2009/10 and not 2002/03. As an assessment for one specified tax year could never be or take effect as an assessment for another tax year (para [12]) the appeal against the 2002/03 s282 TCGA assessment must succeed (para [19]).
In the circumstances it was not necessary to consider Z’s contention (set out in para [7] below) that the underlying assessment or the valuations used in the CGT computation to determine the amount of tax payable under the s282 TCGA assessment should be reopened (para [21]).
JUDGMENT MR JOHN BROOKS: [1] Mrs Zoe Hamar appeals against an assessment to capital gains tax (CGT) for 2002-03 in the sum of £43,501.20 in respect of a chargeable capital gain of £108,753.00. Mrs Hamar was notified of the assessment, which was made under s282 of the Taxation of Chargeable Gains Act 1992 (TCGA), in …Continue reading "Burgess & anr v Hawes & ors [2011] UKFTT 687 (TC)"