Hypothetical question

Dr House · 12 Apr 2008 at 22:05

If you win something in a game of cards with a friend for example a car do you have to pay tax on it?

Wiggins · 12 Apr 2008 at 22:05

No.

It could be seen as a gift

[TR]SweetSpotOz · 12 Apr 2008 at 22:09

Dr House · 12 Apr 2008 at 22:11

Ok second question, if the owner of the car was exempt from paying VAT (eg diplomat, US armed forces...) so when he sells the car he has to pay VAT on the sale price.
So how would the tax man judge the sale price?

Wiggins · 12 Apr 2008 at 22:12

Nope.

You can hand over the keys of a 12 bedroom mansion in LA if you wanted to as long as it is a gift.

George Clooney gave his P.A a $40,000 Merc and a $1.2 million home as a gift.

Wiggins · 12 Apr 2008 at 22:16

Paras said:
Ok second question, if the owner of the car was exempt from paying VAT (eg diplomat, US armed forces...) so when he sells the car he has to pay VAT on the sale price.
So how would the tax man judge the sale price?

He does not pay VAT on the sale price. He basically pays the premium for the car to be sold.

Am I right?

Energize · 12 Apr 2008 at 22:17

Paras said:
If you win something in a game of cards with a friend for example a car do you have to pay tax on it?

Just queries

Sell it for £1.

JBuk · 12 Apr 2008 at 22:23

could it be seen as gambling without a license?

Morba · 12 Apr 2008 at 22:23

how was it won?
are we talking it was won over a single hand or over a whole game (tournament)?
If tournament, you could say the sale price was the buyin price.

Vonhelmet · 12 Apr 2008 at 22:44

Gaming winnings are exempt from capital gains tax. See section 51(1) of the Taxation of Chargeable Gains Act 1992.

Vonhelmet · 12 Apr 2008 at 22:54

Wiggins said:
No.

It could be seen as a gift

If it's a gift, the proceeds are deemed to be market value. The only exempt person is your spouse. Gifts to anyone else are subject to market value provisions.

Dr House · 12 Apr 2008 at 23:02

Wiggins said:
He does not pay VAT on the sale price. He basically pays the premium for the car to be sold.

Am I right?

Basically what happens is when they sell the car the buyer pays the sale price + VAT on the sale price to the tax man, I just don’t know how it would work if the car was won on a private cards game.

The winnings would not be classified as a gift and all gifts over X amount are subject to CGT anyway.

[TR]SweetSpotOz · 12 Apr 2008 at 23:19

[TR]SweetSpotOz · 12 Apr 2008 at 23:19

dowie · 12 Apr 2008 at 23:20

surely gambling winnings are classed as gambling winnings and as vonhelmet has already pointed out are not liable for CGT

unless this is some sort of attempt at a tax dodge - i.e. pretend that he 'won' the car in a bet....

Vonhelmet · 13 Apr 2008 at 00:29

Paras said:
The winnings would not be classified as a gift and all gifts over X amount are subject to CGT anyway.

All gifts, except to spouses, are subject to CGT. There'd be other exemptions depending on the nature of the gift i.e. what kind of asset it is, and if the amount was below the annual exemption then obviously there'd be no tax.

Talking of exemptions, there's no capital gains on motor cars per s263 TCGA 1992, so the whole question is doubly irrelevant. How did I miss that before...

Energize · 13 Apr 2008 at 00:41

vonhelmet said:
If it's a gift, the proceeds are deemed to be market value. The only exempt person is your spouse. Gifts to anyone else are subject to market value provisions.

Can't you just sell something for 1p instead of counting it as a gift?

Vonhelmet · 13 Apr 2008 at 00:58

Energize said:
Can't you just sell something for 1p instead of counting it as a gift?

Well, the term used in the legislation in this case isn't "gift", it's "bargain not at arm's length" meaning that it's not a sale in the ordinary course of proceedings to a normal third party. Ordinarily, you'd never sell, say, a house for 1p, and certainly not to a person you didn't know well. As such, you can't sell someone close to you (be that a relative, friend or otherwise) something for significantly less than it's value, as the law just deems the sale proceeds to be the market value.

Energize · 13 Apr 2008 at 01:01

I can't believe the government can dictate how much you can sell something for. Shows you how bad this country is nowadays I guess.

Edit - How come you don't pay vat when you sell something on ebay?

Biohazard · 13 Apr 2008 at 01:06

Paras said:
Ok second question, if the owner of the car was exempt from paying VAT (eg diplomat, US armed forces...) so when he sells the car he has to pay VAT on the sale price.
So how would the tax man judge the sale price?

Those items that are imported for US forces are done so on the signed agreement that the vehicle will not be sold in the UK, and that it must be deported subsequently after their service is over to recieve duty suspended status / or Temporary Import.

For that US service personel to sell the vehicle here the import taxes would then become due. you would in essense need to make a declaration of sale to Customs including a valuation statement.

They would notice a car is not worth anywhere near £1.

And from the list of cars I have seen the yank millitary bring over here, its mainly 4x4 and Harley's. So it would stick out a mile, and there are people asigned to monitoring what happens to those vehicles.