Taxed twice? Incorporation | AccountingWEB

Taxed twice? Incorporation

Hi - farming partnership considering incorporating fully or maybe just putting in the plant & machinery to form a company that would do the 'farm work'.

The sale of the plant & machinery would crystallise a gain for CGT albeit at 10% re entrepreneur's relief and as is usually the case the 'purchase' price would become a directors loan in the company.

Am I right in thinking that if any of the directors then dies fairly soon into the formation of the company then IHT becomes due on the 'directors loan'? - Effectively surely the same money being taxed twice?

Suppose you would cover this potential libility off by buying some term / reducing term assurance on each of the director's lives (altho age / health of 1 of the directors could make cost of policy prohibitive.

Also - if the land is held outside the company presume that a formal tenancy req'd to maintain APR relief.

But again looking at IHT if one of the directors were to die within the 7 years that the company should have 'ownership' of the land & or the 2 years 'occupation' of the land then would there be implications for APR - suppose I am asking here the wisdom in doing anything which may involve IHT ivo the health of 1 of 'them' not being particularly robust.

Many thanks in advance for comments!

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IHT etc

gbuckell |
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