Sign Prevents Acquisition of Right of Way
The Upper Tribunal (UT) recently ruled on an appeal against a decision of the First-tier Tribunal (FTT) that a sign saying there was no public right of way over a...
Continue readingWhen a Dutch man invested $1,400,000 (half from the sale of his house in the Netherlands and half borrowed) in a bundle of life assurance policies, he did not anticipate that the result would be a financial disaster.
He made the investment in 2004. In 2006, he bought a house in England, then in 2007 he withdrew approximately half of the money in the policy and repaid his loan from the bank plus the accrued interest. In 2008, he withdrew almost all of the rest of the money in the policy, part of which was used to renovate the house he had purchased.
When he made the policy withdrawals, he took no advice: he simply put an ‘x’ in the box which indicated that the withdrawals were partial withdrawals of the sums in the policies.
Since he received back no more money than he had put in, he assumed that there would be no tax implications and made no entries on his tax return. However, the insurance company informed HM Revenue and Customs (HMRC) of the withdrawals, as it was obliged to do, and HMRC opened a tax enquiry.
Regrettably for the man, withdrawals by way of partial surrender of such policies are taxable in any one tax year to the extent that they exceed 5 per cent of the premium paid times the number of years the policy has been running…so almost all the money withdrawn was taxable.
Try as it might to find a ‘fair result’, the law is clear and the First-tier Tribunal was forced, ‘with a heavy heart’, to dismiss the taxpayer’s appeal against the assessment – which, it was claimed, would bankrupt him.