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Our longstanding clients — a husband and wife — took advice from their stockbroker with regard to the disposal of shares and, based on his records of share disposals, the husband had no capital losses and the wife had capital losses brought forward.
The stockbroker therefore advised the husband that he should gift some of his shares to his wife, which she then sold on the open market on the same day.
Our longstanding clients — a husband and wife — took advice from their stockbroker with regard to the disposal of shares and, based on his records of share disposals, the husband had no capital losses and the wife had capital losses brought forward.
The stockbroker therefore advised the husband that he should gift some of his shares to his wife, which she then sold on the open market on the same day.
Despite discussing this with our clients at the time, the stockbroker was not made aware of the fact that in the previous tax year the husband had incurred capital losses with Lloyd's and his wife had made a gift of a property to her son which created a gain that had utilised all her losses brought forward.
If I declare the gain on the disposal of the shares received from her husband on the wife's tax return, this is going to produce a capital gains tax liability of approximately £2,000.
If I can argue that the same day inter-spouse transfer was done deliberately to avoid tax and is therefore caught by the anti-avoidance legislation, the husband would be able to utilise the capital losses brought forward, so that his capital gains tax liability would then be nil.
I would appreciate readers' views on whether the anti-avoidance provisions work in reverse.
Query T16,724
