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Land held in Trust sold to related party

A Trust owns a piece of land

There are options to develop and sell, sell with planning or purchase by one of the trustees personally to sell on

I have a number of questions :-

1. Will the trust need to get a market rate valuation to sell to a related party - i.e trustees, or a company in which they are the sole directors and shareholders

2. Is the trust allowed to sell to a related party - or does this depend on the trust deed?

3. If the land is sold without planning, the related parties add planning and then sell at a big profit, will HMRC take a dim view?

4. Anything else we need to consider?

Any help / guidance gratefully received


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By LyneT
10th Apr 2012 16:23

There is nothing to stop trustees selling the land to related parties.  However, the trustees must act in the interests of all of the beneficiaries.  So therefore, if the trust sells the land to beneficiary A who then gets planning permission on the land, beneficiary B could ask why the trustees chose to do that rather than get planning permission themselves and share the proceeds of any sale.  I realise I may be making assumptions here about the beneficiaries.   This could be particularly problematic if any of the potential beneficiaries of the trust is under 18 and cannot object at the time.

In terms of selling the land and the beneficiaries getting planning permission, then this is perfectly acceptable tax planning.

Good luck.

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