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Posted Wed, 06 Oct 2021 09:48:48 GMT by Cat@123 Meow
The date of disposal for Capital Gains tax purposes is the date contracts are exchanged (or the date that the contract becomes unconditional). In Hong Kong, a “provisional agreement”, which is legally binding between the purchaser and vendor, is drafted and entered into. It must be complied with and, if not replaced within the stipulated time by a formal sale and purchase agreement, may be relied on to govern the rest of the transaction or to sue for compensation for breach of contract. The purchaser’s solicitors will then draft a formal sale and purchase agreement based on the results of the due diligence exercise. Once both parties agree to the form and content, it will be executed and registered at the Land Registry. Taking into consideration in CGT, is the date of provisional agreement the date of disposal?
Posted Thu, 07 Oct 2021 12:08:49 GMT by HMRC Admin 2
Hi,

You can find guidance on date of disposal here:

CG14250P - Capital Gains manual: introduction and computation: computation: date of disposal: contents

Thank you.
Posted Wed, 20 Oct 2021 09:12:29 GMT by Cat@123 Meow
I reviewed the guidance but cannot find the details. Where can I confirm the date of disposal: date on provisional or formal sales and purchase agreement?
Posted Wed, 20 Oct 2021 16:22:13 GMT by HMRC Admin 9
Hi, 

Additional guidance can be found here:

CG14260 - Computation: rules determining date of disposal

Thank you. 
Posted Wed, 03 Nov 2021 21:10:50 GMT by Cat@123 Meow
The date of disposal for Capital Gains tax purposes is the date contracts are exchanged (or the date that the contract becomes unconditional). In Hong Kong, a “provisional sales and purchase agreement (S&P)”, which is legally binding between the purchaser and vendor, is drafted and entered into. It must be complied with and, if not replaced within the stipulated time by a formal S&P, may be relied on to govern the rest of the transaction or to sue for compensation for breach of contract. The purchaser’s solicitors will then draft a formal S&P based on the results of the due diligence exercise. Once both parties agree to the form and content, it will be executed and registered at the Land Registry. Stamp duty is payable within 14 days from the signing provisional S&P. I read "CG14260 - Computation: rules determining date of disposal". It seems the provisional S&P is an unconditional contract. I seek tax advisors opinion. One agrees provisional S&P is regarded as the date of disposal. Then other tax advisor relies on the formal S&P. Which S&P (provsional or formal) shall I pursue in determining the time of CGT?
Posted Thu, 04 Nov 2021 11:38:27 GMT by HMRC Admin 20
Hi Cat@123 Meow,

We would need to see the relevant documentation for a specific transaction.
However it would appear that a provisional S & P is conditional on being replaced within a stipulated time by a formal S & P contract.
For clarification however, it may be best to send us in the details. 

Thank you.
Posted Thu, 04 Nov 2021 13:52:27 GMT by Cat@123 Meow
A formal S&P contains terms that are more detailed and is intended to replace the provisional S&P. But it does not mean the provisonal S&P becomes conditional because all the key terms are used in drafting formal S&P. I give you more details as follows. After preliminary negotiations occur and both parties settle on a price, a “provisional S&P”, which is legally binding between the purchaser and vendor, is drafted and entered into. It must be complied with. An initial deposit is usually paid on signing. A formal sale and purchase agreement should be drafted by a solicitor based on the provisional agreement. Such a provisional agreement usually contains the following terms: Address of the premises; Price of the premises; Details of the parties; Amount of the initial deposit (industry practice being 1% to 3%) to be paid on the signing of the provision agreement; Amount of the further deposit (industry practice being 10% inclusive of the initial deposit) to be paid on the signing of the formal sale and purchase agreement); When the formal sale and purchase agreement is to be signed; The completion date (on which the vendor disposes of the property to the purchaser); Stipulating that the balance price is to be paid by the purchaser of the aforementioned property by the completion date; The apportionment of legal expenses and stamp duty between the parties; The amount of commission payable to the estate agent by the purchaser and/or vendor; Liability for breach of agreement; and An escape clause providing a date before which either party may withdraw from the transaction. The purchaser’s solicitors will then draft a formal sale and purchase agreement based on the results of the due diligence exercise. Once both parties agree to the form and content, it will be executed and registered at the Land Registry. The purchaser’s solicitors will then draft a formal sale and purchase agreement based on the results of the due diligence exercise. Once both parties agree to the form and content, it will be executed and registered at the Land Registry.
Posted Fri, 05 Nov 2021 15:47:12 GMT by HMRC Admin 20
Hi Cat@123 Meow,

Unfortunately as this is complex, as advised we would need to see the specific documentation for the sale and deal with this on an case by case basis.
As this forum is for general advise only, we cannot comment on specific individual cases.
Can you please therefore send in any relevant paperwork associated with your sale so we can review this further. 

Thank you.
Posted Fri, 05 Nov 2021 17:48:43 GMT by Cat@123 Meow
Thanks for your reply. Where can I send those details to HMRC for review?
Posted Mon, 08 Nov 2021 12:25:51 GMT by HMRC Admin 17

Hi,
 
Please send these to HMRC,
PAYE and Self Assessment,
BX9 1AX. 

Thank you.

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