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Well I think you have

answered much as I thought...
Well I think you have answered much as I thought ,but I shall need greater clarity
on question 4 so I will try and get this from SAmTax ,but she is not online at present. The property was sold complete with furnishings which actually were not sold at original purchase price but cost much less . My Spanish solicitor bulked all this together on the contract but HMRC say it must be shown as a seperate item even though the contract clerly states it is in the price. They say ,therefore , that I cannot deuct this for capital gains tax purposes.If this is correct the only way possible to tight this ,as far as I can see is to get my Spanish accountant to obtain a notarised document stating the value . ehat do you think?
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Answered in 10 minutes by:
4/13/2013
Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 15,950
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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Hi.

The UK tax office will only be interested in the sale of the property, not the furnishings unless there were individual items sold for more than £6,000. Take a look at HS293 here for the CGT rules on chattels.

A notarised document from your accountant or lawyer which splits the proceeds between the property and the furnishings will suffice for HMRC purposes. They may not even ask to see the contract of sale but it would make sense to be ready if they do.

Let me know if you have any further questions.
Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
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Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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Customer reply replied 4 years ago

Thank you for your reply.


I have now received an additional tax demand from Spain for capital gains over the 3% withholding tax . My Spanish accountant says this is "not a proper requirement" by the Spanish Inland Revenue and there is no requirement to pay . However after 4 years they can decide payment, plus interest, must be paid . I have been told that they would pursue this in the UK if not paid. I think I should pay as the calculation appear correct .


My question is will I be able to offset this payment against my UK tax liability if I pay it in Spain and will the UK tax authority accept this as a proper tax demand ?

As I said in my answer to the other question you posted, the 3% is simply an advance payment of CGT in Spain which is withheld by your lawyer. If you have no CGT to pay in Spain, you can claim it back. If you do have a CGT liability in Spain, the 3% is part of that and you can claim a deduction for all the Spanish CGT against your UK CGT liability.
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Customer reply replied 4 years ago

Yes ,I understand that , but You have not fully answered my question which was is the way the tax is estimated in Spain and called "not a proper requirement " acceptable as a tax demand in the UK and can be offset against my liability here. Please reread my question. I am not talking about the original 3% but how the remainder is described. The last thing I want to do is pay it there only to find here that the HMRC will not accept this notification as it is not a demand there but a declaration by me that more tax is due

I've looked at your other question again.

I really do not understand your Spanish accountant's comment that the extra tax is not a proper requirement and that there is no need to pay it. My understanding is that the rate of CGT in Spain on property owned by a non-resident is 21%. The Spain tax year runs from 1 January to 31 December so your liability for 2012 will only recently have been finalised. The 3% is simply an advance payment of a potential CGT liability.

Without being able to see the paperwork and any calculations I really cannot comment further but you said earlier that the calculation appears to be correct. If you were my client I would be claiming a deduction for the full amount of Spanish CGT against your UK CGT liability and I would not expect it to be refused by HMRC. You should ask the Spain tax office for a receipt for the CGT you pay.

 

The Spanish tax office will go through the UK courts if you don't pay your Spanish CGT liability.

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