Max ceased trading two years ago, and is now about to move overseas.

Max:
– Has always been UK resident and domiciled.
– Is widowed and has one daughter, Fara.
– Is a higher-rate taxpayer.
– Makes disposals each year to use his annual exempt amount for capital gains tax.

Max – move overseas:
– Max has decided to move overseas for a period of two and a half years commencing on 1 November 2018.
– Max does not intend to return to the UK at all during this period.
– Max will return to live permanently in the UK on 30 June 2021.
– Max is not entitled to use the split year treatment for determination of his residence status in any tax year.

Proposed sale of the warehouse:
– The warehouse was acquired on 1 August 2014 for a cost of £72,000.
– On 1 December 2013, Max had sold a small showroom for proceeds of £78,000, which gave rise to a chargeable
gain of £16,000.
– Max made a claim to defer the gain against the acquisition of the warehouse.
– Max has received an offer of £84,000 for the immediate sale of the warehouse in June 2018.
– An alternative buyer has offered £90,000 for the warehouse, but will not be able to complete the purchase until
June 2019.

Required:
(b) Explain the effect of Max’s period of living overseas on his UK residence status for all relevant tax years, and advise him of the CGT consequences of the sale of the warehouse (1) in June 2018, or alternatively (2) in June 2019.

Note: No calculations are required for this part. (6 marks)