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Where the dangers lurk
Key points
- The pre-owned asset tax regime was introduced by FA 2004 for arrangements put in place after 18 March 1986.
- The regime taxes everything not explicitly excluded from the charge and so leads to many unintended outcomes.
- Different tests and formulas apply to land chattels and intangibles.
- There is no motive test or defence of unexpected change of circumstances.
- Many taxpayers are unaware of the pre-owned asset tax regime so do not know to report transactions.
Halloween seems an appropriate time to highlight some of the pitfalls and traps in the pre-owned asset tax (POAT) regime which are frighteningly easy for even the most conscientious client and adviser to fall into. This article identifies some red flags to help the busy practitioner recognise the POAT trap before it is too late.
Background
The POAT regime introduced by FA 2004 s 84 and Sch 15...
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