Question 2a
Your manager has had a meeting with Brad, a client of your firm. Extracts from your manager’s meeting notes together with an email from your manager are set out below.
Extracts from meeting notes
Personal details
Brad is 69 years old. He is married to Laura and they have a daughter, Dani, who is 38 years old.
Brad had lived in the UK for the whole of his life until he moved with his wife to the country of Keirinia on 1 January 2010. He returned to live permanently in the UK on 30 April 2013. Whilst living in Keirinia, Brad was non-UK resident and non-ordinarily resident. He is now resident and ordinarily resident in the UK. He has always been domiciled in the UK. Brad has significant investment income and has been a higher rate taxpayer for many years.
Capital gains
Whilst living in the country of Keirinia, Brad sold various assets as set out below. He has not made any other disposals since 5 April 2009.
| Asset | Date of sale | Proceeds | Date of purchase | Cost |
|---|---|---|---|---|
| £ | £ | |||
| Quoted shares | 1 February 2010 | 18,900 | 1 October 2008 | 14,000 |
| Painting | 1 June 2012 | 36,000 | 1 May 2008 | 15,000 |
| Antique bed | 1 March 2013 | 9,400 | 1 March 2010 | 7,300 |
| Motor car | 1 April 2013 | 11,000 | 1 February 2009 | 8,500 |
I explained that, although Brad was non-UK resident and non-ordinarily resident whilst living in Keirinia, these disposals may still be subject to UK capital gains tax because he will be regarded as only temporarily non-UK resident. There is no capital gains tax in the country of Keirinia.
Email from your manager
In preparation for my next meeting with Brad, please prepare the following:
(a) Capital gains tax
An explanation, with supporting calculations, of the UK capital gains tax liability in respect of the disposals made by Brad whilst living in the country of Keirinia. Your explanation should include the precise reasons for Brad being regarded as only temporarily non-UK resident and a statement of when the tax was/will be payable.
Tax manager
Required:
Carry out the work required as requested in the email from your manager. The following marks are available.
(a) Capital gains tax. (8 marks)