Commentary

I3.746 Opting out of a pre-owned assets charge

IHT, trusts and estates

I3.746 Opting out of a pre-owned assets charge

I3.746 Opting out of a pre-owned assets charge

When the pre-owned assets charge was first mooted, there was an expectation that the government might introduce legislation to facilitate the 'dismantling' of offending arrangements before 2005–06. With hindsight this seems to have been somewhat naïve, because many arrangements exposed to the pre-owned assets involve past gifts which cannot be reversed unilaterally by the original donor, and others involve settlements which cannot be undone without recourse to the courts. No 'dismantling relief' was brought forward in the legislation, and the government made no moves to allow the reversal or cancellation of past tax implications of arrangements being dismantled (eg capital gains tax, SDLT etc). Instead, an election procedure allows a taxpayer to opt out of the pre-owned assets charge on any particular property.

The opt-out election—land and chattels

A taxpayer facing a charge by reference to his enjoyment of any land or a chattel ('the relevant property') under FA 2004, Sch 15, para 3 or para 6 has a right to elect that FA 2004, Sch 15 shall not apply to him during the 'initial year' and subsequent years of assessment by reference to that property or any other property for which it has been substituted1. For this purpose a person 'enjoys' property if he occupies it (in the case of land) and if he is in possession of it or has the use of it (in the case of a chattel)2.

The 'initial year' is the first year of assessment in which he

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