Car tax backdating

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The loss of the deposits was not capable of being allowed against chargeable gains. Property sellers should consider requiring the prospective buyer to pay a non-returnable deposit.A forfeited deposit may at least provide some consolation if the contract for the property is rescinded through no fault of the seller, notwithstanding that there may potentially be some tax to pay on the receipt.If the individual suffering the forfeited deposit is a property trader, the expenditure might be an allowable deduction from profits on the basis that it was ‘wholly and exclusively’ incurred for trade purposes (ITTOIA 2005, s 34), if the property would have been a trading asset had it been acquired.Otherwise, as indicated above, a forfeited deposit generally falls to be treated as an option binding the grantor to sell that is not exercised.In the recent case Hardy v Revenue & Customs [2015] UKFTT 250 (TC), the taxpayer funded 10% deposits on the prospective purchase of two properties.

In the case of a forfeited deposit to purchase an individual’s only or main residence, HMRC will not allow private residence relief for capital gains tax purposes in respect of the receipt, on the basis that there has been no disposal of the property itself (CG64609).

the option) by the individual selling the property (TCGA 1992, s 144(1)).

This treatment as a separate asset broadly applies unless the option is exercised, and the whole proceeds are chargeable as a gain (Strange v Openshaw [1983] STC 416).

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