Just had discussions with a new client who is a general builder and only works for private individuals renovating etc. He has also bought a property with another individual with the intention of extending, developing and selling. No partnership was set up and the previous agent had advised that any profit could be dealt with through CGT and not income tax. Materials were purchased under a developments trade name and paid by the two individuals from the funds raised, but the labour was invoiced by the client to the development and will be paid once the property is sold! Any remaining profit will then be split between the client and the other investor. I feel that they're trading as they're considering purchasing another property after sale and the initial intention was to develop and sell, but the client will then have invoiced himself for the work carried out!
04th Dec 2012 17:06