Commentary

I3.740 Territorial issues

IHT, trusts and estates

I3.740 Territorial issues

Pre-owned assets—further rules

I3.740 Territorial issues

FA 2004, Sch 15 does not apply in relation to any person for any year of assessment during which he is not resident in the UK1. The intention of this seems to be to exclude any non-UK resident person from being a 'chargeable person' for pre-owned assets purposes. HMRC's Technical Guidance interprets 'not resident' as meaning 'not resident for income tax'2.

Example 1

In 2000 Mr R, a UK resident, gifted £200,000 to his son, who applied the money in acquiring a villa in the south of France. Mr R makes occasional use of the villa. The contribution condition is met during each period of occupation, and he faces a pre-owned assets charge.

Subsequently Mr R ceases to be UK resident, but continues to use the villa. There is no pre-owned assets charge, because FA 2004, Sch 15 does not apply to Mr R while he is non-UK resident.

There are circumstances in which a person may be resident in the UK for part of a year of assessment—for example, at the beginning and end of certain periods spent working full-time abroad under a contract of employment3. The same rules will presumably apply for the purposes of the pre-owned assets charge4.

The way in which FA 2004, Sch 15, para 12(1) is drafted may leave some doubts as to its exact meaning. It states that Sch 15 is not to apply 'in relation to any person' for any year of assessment during which he is not resident in

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