Roger William Morgan & Anor v The Commissioners for HMRC
[2024] UKFTT 565 (TC)
Elizabeth Rooke v The Commissioners for HMRC
9 May 2024
[2024] UKFTT 403 (TC)
First-tier Tribunal
Someone disputed their capital gains tax bill after selling a flat they jointly owned with their sibling. A tax tribunal looked at years of financial documents and decided they still owed more tax, rejecting claims of fraud and recalculating the amount due to be around £6300.
Key Facts
- •Appeal against HMRC's refusal of a claim for overpayment relief in respect of capital gains tax (CGT) paid on the disposal of a flat in London in June 2015.
- •The flat was jointly owned by the appellant (Mrs. Rooke) and her brother.
- •Mrs. Rooke acquired an interest in the flat in October 1999 and increased her share in 2003.
- •The flat was let until 2013, then occupied by Mrs. Rooke until 2015.
- •Mrs. Rooke claimed she understated her ownership proportion and disputed the flat's value in 1999.
- •Mrs. Rooke made various allegations of fraud involving banks, lawyers, and HMRC, which the Tribunal found unreliable.
- •The Tribunal examined multiple transactions and events related to Mrs. Rooke's ownership of the flat, including initial acquisition, additional borrowing, and changes in ownership shares.
- •Disputes involved the appropriate calculation of allowable costs, the qualifying period for private residence relief, and the determination of Mrs. Rooke’s ownership share of the flat.
- •The flat was sold in June 2015 for £940,000, with net proceeds split equally between Mrs. Rooke and her brother.
Legal Principles
Transactions between siblings are treated as taking place at market value for tax purposes.
TCGA 1992, s18 (and s17)
The terms of an express trust prevail, even if grounds exist for considering a constructive trust with different shares.
Goodman v Gallant [1986] FLR 106
On an appeal to the Tribunal, the Tribunal shall increase an assessment where the Tribunal decides that the appellant has been undercharged by an assessment.
s50(7) Taxes Management Act 1970
Outcomes
Appeal dismissed.
The Tribunal found that Mrs. Rooke’s claims for overpayment relief were unfounded after carefully examining the evidence and applying the relevant legal principles. The Tribunal determined the correct calculation of capital gains tax due, resulting in a remaining liability for Mrs. Rooke.
Remaining liability to HMRC assessed at £6,308.44
This figure was calculated based on the Tribunal's findings regarding the correct ownership percentages, allowable costs, private residence relief, and lettings relief. Corrections were made for errors in previous calculations and assessments.