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Transfer to connected party was a ‘disposal’ and there was no bare trust or implied trust

By Mark McLaughlin, October 2020

The transfer of property to a connected party to raise a mortgage was a ‘disposal’ for capital gains tax purposes, the bare trust provisions did not apply to the transfer and there was no implied trust in relation to it.  

A property in London was jointly owned by the appellant (‘A’) and one of his brothers (‘S). The property was subject to restraint orders, which prevented the appellant from raising funds by securing a mortgage on the property. In May 2012, the High Court granted variations to the restraint orders to permit the sale of the property. The property was sold to a company owned by a relative (‘MIS’). The Land Registry form TR1 reported its transfer on 31 May 2012 for £499,000. 

The appellant ceased reporting rents from the property on his self-assessment returns from 31 May 2012.

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