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HMRC internal manual

Capital Gains Manual

Bare trusts: bare trusts: administration

HMRC Trusts and Estates may deal with bare trusts, either as a matter of convenience, where land is owned for a number of individuals or because a trust has become bare. In either case, if the taxpayers agree, it is acceptable for HMRC Trusts and Estates to agree the amounts of any chargeable gains. This is particularly useful where land values have to be agreed, but see in this connection CG74243. Note also that a disposal may take place without any action by the trustees, eg because one person sells an interest to another, or dies.

However, unlike Income Tax assessments, CGT assessments must be made on the beneficiaries and not on the bare trustees.

Similarly claims and elections such as elections under TCGA92/S35 (6) (election to exclude the `kink test’) must be made by the individual beneficiary by reference to his or her own circumstances.

In some cases the beneficiaries may not realize that they are liable to CGT. It is therefore important, if significant amounts are at stake, that the beneficiaries’ offices are notified.