Mark McLaughlin points out that transactions should be structured correctly to avoid the risk of adverse tax consequences.
Capital gains tax (CGT) relief is generally available on the disposal of property in respect of improvements, etc., for ‘the amount of any expenditure wholly and exclusively incurred on the asset by him or on his behalf for the purpose of enhancing the value of the assets, being expenditure reflected in the state or nature of the asset at the time of the disposal’ (TCGA 1992, s 38(1)(b)).
Note the requirement that expenditure is incurred on the asset ‘by him or on his behalf’ (‘him’ being the person to whom the gain accrues on the disposal of the property). Does this mean that (for example) enhancement expenditure incurred by an individual property owner’s company could be treated as incurred by the property owner for the purposes of claiming relief for enhancement
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