Honest mistake

The taxpayer’s husband inherited a property with a probate value of £40 000 in 1986. In November 2005 he transferred a half share in the property to his wife (the appellant) by way of gift. The value of the whole property at that time was £450 000.

In April 2006 the property was sold and the appellant’s share was £232 500.

In her tax return the appellant reported the gain using the 2005 value as the acquisition cost. HMRC disputed this figure saying that the 1986 value should be used.

This was on the basis that under TCGA 1992 s 58 a transfer between spouses is on a no gain no loss basis and therefore the husband’s base cost should be used in computing her capital gain.

The taxpayer appealed.