Ring-fencing a freehold property
My client is a limited company. The company owns the premises from which the trade operates (funeral director).The sole shareholder wants to either take the property out the company as his "pension" once the business is sold, or ring-fence it in some way via another ltd company.
The first option will be expensive in tax terms as there's a huge capital gain in the building and if I had hair I'd be pulling it over the second! My schemes of demergers, etc, all seem to hit the same brick wall that a company owning and renting a property is not trading for tax purposes so won't qualify.
The shareholder and his wife each operate sole traderships, undertaking floristry and memorial masonry respectively, so I had pondered backing those trades into the company, then demerging say the funeral and floristry elements, to leave the property and the memorial trade in the old company thus retaining its trading status. After a suitable time we could then unofficially "transfer" the masonry side to leave the original company holding just the property.
Does anyone have any suggestions? I guess it's a common enough scenario in these days of under-performing pension schemes.