A new client owned a piece of land and decided to build 4 new houses on it. He incorporated a company, sold the land to the Company and proceeded to build the properties which were eventually sold at a good profit.
My question is up until now the previous accountant has only submitted dormant accounts although the cost of the build has been paid by the Company. The owner now wants to get things tidied up. Should the accounts be prepared in the normal way with a profit and loss account and balance sheet or should it all be done as capital gains.
Also I suspect he will be personally liable for CGT on the sale of the property from himself to the Company.
Any help and comments would be appreciated.
Related resources
Replies (4)
Please login or register to join the discussion.
So, how were costs dealt with, who paid, how did company get the money?
Where did sale proceeds go?
What about vat claims, presume company registered?
Presume previous accounts are therefore nonsense?
First step, check where title to property lies, do not trust client that it was sold to company, check it was; any client in such a mess is a prime candidate for telling you nonsense, so check what they say matches reality before going any further. (Get confirmation from say solicitor who sold to company/sold finished houses)
Edit: If company sold houses it is trading and CT due on trading profits, if individual sold to company there is possibly capital gain on individual unless he himself previously held as trading stock in which case there is possibly income tax.
DJKL
If the previous accountant submitted dormant accounts before the land purchase he could be correct if no other transactions took place The OP needs to confirm
Pretty fast build and sale then.
Acquire site (with/without planning), deal with planning, building warrants, get on site, sort groundworks, build properties, market for sale, complete and get habitation certs, sales.
It might all be done in 21 months (assuming 12 month accounts and nine month lodging deadline) but nothing we have ever built has gone at that pace.
