Proposals to reform fees for grants of probate - CIOT comments

6 Jul 2017

In May 2014, the CIOT wrote to HMRC seeking confirmation that s162 TCGA 1992 relief would be available in such circumstances. HMRC confirmed that, subject to all other conditions being satisfied, s162 TCGA relief would apply. The correspondence was posted on the CIOT website and is available here.

However, in February 2016, HMRC wrote to the CIOT setting out their revised position that incorporation relief under section 162 is not available given that ‚ the whole assets of the business‚ have not been transferred, it being the case that the assets of the LLP which are deemed to be held by the existing corporate partner (which is also the transferee of the LLP‚ s assets) continue to be held by it. HMRC have indicated that this revised interpretation will take effect from 30 April 2016.

The full correspondence is can be found here.

The CIOT‚ s Capital Gains Tax and Investment Income Sub- committee is considering the validity of HMRC‚ s revised interpretation. However, irrespective of the correct legal position HMRC‚ s revised interpretation raises several concerns;

Its effect is to potentially place obstacles in the paths of those seeking to dismantle mixed partnerships; Subject to 3 below, it does not allow for any relief for those who, in reliance on HMRC‚ s confirmation that s162 TCGA relief would be available, have incorporated mixed partnerships; It raises issues of legitimate expectation if no grandfathering or other relief is forthcoming.

The CIOT has therefore written to HMRC:

To request that HMRC confirms that grandfathering is in place for those who have relied on HMRC‚ s original interpretation; To consider introducing a specific statutory relief so that s162 TCGA 1992 relief is available when mixed memberships incorporate in such circumstances.

Our submission can be found below in PDF format.

Technical Team