I have a client that runs a car selling business through a company he owns. It operates from a row of 9 shops. The company owns 3 shops and 6 shops are owned by him personally. He wishes to change this position so the company owns all of the 9 shops. The 6 owned personally were bought in the 1960's and the relevant 1982 valuation for each shop is £20,000 and the current market value is £150,000. What reliefs are available to him to do the above?
Replies (22)
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I would suggest
That your client might avail himself of donottellhmrc relief.
I can also make large buildings invisible on request.
Gift Relief
May well be in point; have a look at s165 TCGA 1992.
You should fully explore why the assets are to be transferred to the company though. Where is it going? Is he selling the company? Are you looking to secure 100% BPR handing it down?
Before IHT
The purchase date is before IHT was brought in and Estate Duty existed. I am not 100% sure if that impacts things but it is worth considering; maybe Portia can be coaxed into clarifying as (s)he'll undoubtedly know. =)
Lots to think about
How is the company going to pay for them?
What about stamp duty, solicitors fees, etc?
Does he currently get rental income from them? Is it tax efficient for him to get his money another way?
I would get a specialist to deal with this for him
Estate Duty
Is not relevant. We are only interested with transfers in the 7 years preceding death or a lifetime chargeable transfer.
SDLT will not be negligible. These will be linked transactions, so the SDLT will be 4% of £750,000 = £30,000.
No business is being transferred to the company. Gift relief would be available to the extent that the properties are sold at undervalue, as has been noted.
gift horse
So polite! It will take you far!
I suggest that you place more value on the quality of the free advice you are getting, and put up with any acerbity.
s165(2)(a)(ii)
Am I misunderstanding the meaning of the above clause?
"An asset is within this subection if -
(a) it is, or is an interest in, an asset used for the purposes of a trade profession or vocation carried on by -
(i) the transferor
(ii) his personal company .... etc"
No
The OP is referring to relief under section 162, which will not work, because what is being transferred are assets, and not a business.
I do not think that it has been disputed that relief under section 165 is available.
Thanks
Yes now I re-read the thread I can't see how he's wound up looking at s162 as it isn't mentioned other than in a later of the OP's posts.