Questions of cash: If I sell off my wine, will I be taxed?

Q. Since 1985, I have accumulated a collection of fine wine, which is worth about £100,000. I am considering selling two-thirds and keeping the rest for personal consumption.

I have received conflicting advice regarding capital gains tax. I am a professional trader and higher-rate taxpayer. If I dispose of £70,000-worth of wine in one transaction, incurring a substantial gain, will I be liable to CGT or am I exempt under the "moveable assets" exemption? Would this change if I sell the wine piecemeal?
JR, Twickenham.

A. "The tax treatment of the part-disposal of your wine collection is likely to fall within the disposal-of-chattels regime, falling into the CGT rules," says Glenn Martin, senior tax manager at accountants Moore Stephens.

"But gains on the sale of chattels that are wasting assets - a predictable life of 50 years or less - are exempt from CGT.

Fine wines may be treated as not being wasting assets if it is not unusual to keep all, or samples of, the wine for a substantial time, sometimes over 50 years.

You must obtain advice from a wine expert to decide if your wines can be treated as wasting assets. If your wines are not wasting assets, any profit may be exempt if the proceeds for a single bottle are £6,000 or less, provided it is not part of a "set".

If a bottle is part of a set, the £6,000 exemption applies to the total proceeds for the set. Wine will be deemed to be a set if it was produced from the same vineyard, in the same vintage year, and the bottles are worth more when sold collectively.

"There is a special rule for calculating CGT on the sale of chattels. This restricts the gain to five-thirds of the excess proceeds over £6,000. The tax position would be different if the Revenue could argue you were trading in wine. Any profit would then be taxed as income, not as a capital gain."

Q. My husband and I have for 18 months pursued a claim against Lloyds TSB for the mis-selling of an endowment mortgage in 1988 for our house in Guernsey.

Scottish Widows says we are likely to be £22,200 short on maturity in 2013. Lloyds TSB says the policy was sold by an insurance agency, not by the bank, even though we only met bank representatives. We cannot refer the case to the Financial Ombudsman Service, as it does not cover Guernsey. The Guernsey Financial Services Commission reviewed our documents to see if our complaint involved "any matters of regulatory concern", but it does not have a complaints service similar to FOS.
JD, Guernsey.

A. Peter Neville, the director general of the Guernsey Financial Services Commission, says: "A complainant's recourse is initially directly to the financial services business that sold the product and then, if necessary, to the court."

While the Guernsey administration is discussing setting up an ombudsman scheme, this may be of no help to you, as it is unlikely to be retrospective. But Lloyds TSB has agreed to reopen your case and conduct a full review. It will adopt the same procedure as if the sale fell within UK jurisdiction, though if it does not find in your favour, you will not have recourse to the ombudsman.

* If you have any queries, write to: Questions of Cash, The Independent, 191 Marsh Wall, London E14 9RS, or e-mail: cash@independent.co.uk. Please send copies, not originals.