UKFTT 29 (2010) Thresh v HMRC

Transfer at undervalue - taxpayer won

Case Summary:

HMRC argued that this was a tax and NICs avoidance scheme. 

The director of a building company made a private gain on a development. HMRC tried to tax it as money’s worth within section 62(3) ITEPA2003 , and accordingly “earnings” within 62(2) ITEPA.

The First Tier Tribunal decided he acquired the cottage by reason of an arrangement with the company (entered into in his individual capacity and not as a director or employee) which provided that he would provide financial assistance to the company to enable it to carry out the development in return for the transfer to him of the cottage on completion. It would be taxable as a Capital Gain and Principal Private Residence Relief would cover any gain.