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The Adamant Client
The Adamant Client
By Marie walshe In Property Posted January 21, 2018 0 Comments

My client was going to sell some land he personally owns overseas. The deal didn’t go through but they received £15,000 in compensation for the deal not going through and messing them around.

The client is adamant that the £15,000 isn’t taxable because they paid £80,000 for the land originally and as they haven’t sold the land there is no profit. I have tried to explain that as they haven’t exchanged an asset for the £15,000 it’s a receipt that should be taxed in the current period. They think it should be held over until the land is sold!

The client would be adamant because let’s face it, he does not want to pay tax. I don’t blame him for not wanting to pay tax

I took adifferent approach and said that he might have to pay tax but the amount of tax would depend on the situation. I asked if the prospective buyer was in breach of contract, was there something in the legal documentation giving rise to this payment, was it a forfeited deposit, how exactly did this transfer of £15,000 come to pass and why?

I also asked if the client held the land as stock or in what capacity it was held, what about residence position, was there a contract.

No-one wants to pay tax. We ask lots of questions in order to minimise it.

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