I have a new client that made a profit on a policy which went on his tax return a few years ago. Since then he has sold other parts of the policy which has resulted in a loss each year. A chargeable event certificate detailing the loss was issued in each of the years. Last year he sold the remainder and the policy is now paid up. there was a chargeable event certificate issued at that point. My client is a higher rate tax payer. I'm looking for clarification on how this should have been treated on the tax returns in each year. As far as I can find out (call to HMRC) the following should have happened
1 profit declared on tax return in the year he made a gain
2 in the interim years of losses, no claim made for loss on tax returns as claims for losses are not made until the end of the policy
3 in the final year, loss on chargeable event certificate detailed on tax return as it covers the overall loss of the policy (whereabouts on the tax return?)
If anyone could confirm that or let me know what should have been different I would appreciate it. I just wasn't convinced that the person I spoke to at HMRC really knew what he was talking about. Thanks.
Hi Princess What kind of policy? I would never ever ask HMRC for tax advice - the staff who answer the phones get minimum wage or not much more and dont know much about tax, some of them cannot even string a sentence together (was one I got on the phone the other week), plus what they know is only HMRC interpretation and their own 'guidance' as opposed to tax law.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Thanks for replying, I don't have the details of the policy, just the chargeable event certificates. I have only recently taken him on and his previous accountant has dealt with all years except the final year. It has a bond number and the number of individual policies surrendered on the certificate.
Hi Princess
Im confused re the losses but then Im probably just being a bit thick. Im assuming its a qualifying policy and also not a foreign one. But is it life assurance, annuity, capital redemption or even a personal portfolio bond. All as far as Im aware with similar rules, but some tweaks. So if it was me I would be asking the client what type it is if its not obvious from the certificate. Does the certificate itself show losses? Can you post a redacted copy?
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
