Bank has advised sole trader owing a nursing home to transfer the business to a limited company. No reasons given for this suggestion.
What taxes should he watch out for? Presumably CGT would be rolled over - any elections to be made?
Is there an impact for IHT - BPR?
or is it better to just leave it as a sole trade?
Any other planning issues arise?
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Replies (3)
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It's not appropriate to advise here on this matter.
This is something only an accountant with full access to the records and facts could advise on. There are umpteen things that need to be considered. Even knowing what they are requires detailed knowledge of the client.
Agreed
I totally agree - along that same angle, why on earth would a Bank start delving into accounts advice? Have us lowly accountants started selling loans and overdrafts? I think not. I know what I would be doing, finding out which bank it was, which person said it, and asking for a quiet word with their manager to see if FSA regulated bodies should really be encouraging clients into making decisions about which legal entity they should carry out their business activities in.......surely this could be seen as wrong for the bank to even comment? My gut feeling tells me that the bank have something they can "Sell" this particular client if they go Limited which they cant tick the same box on if they are a Sole trader.This is something only an accountant with full access to the records and facts could advise on. There are umpteen things that need to be considered. Even knowing what they are requires detailed knowledge of the client.
In banks defence
I'm rarely in the position of defending banks but there is a possibility here that the bank has simply asked if the client has considered a Limited Company rather than ADVISED being a limited company. All clients should CONSIDER it.
Whether its tax efficient or not to trade through a Ltd Co requires more information and calculations but personally I wouldn't want to be trading a nursing home with personal financial liability. I would happily however own the property personally and run the trade through the Ltd Co, if that's practically possible in this scenario.