i have a client (limited company) that has sold some property (premises) in the year. In order to calculate the capital gain I need to identify the purchase price, however, the property was given to my client in,lieu of a debt. Therefore what value do I use as the purchase price, I'm assuming market value at the date of acquisition? Not the value shown on the balance sheet. Client had premises valued not long after acquiring and value was lower than amount shown as asset on balance sheet.
Am am I right in thinking I need to use indexation too when calculating the gain?
Also so can someone help with regard to potentially claiming entrepreneur relief?
Where does the chargeable gain get shown on the tax return?
I guess the profit on sale from writing the asset out of the books is ignored when calculating the company tax due as usual.
many thanks
Replies (11)
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If in lieu of a debt, what was the value of the debt?
What debits/credits took place within the books re the debt/asset acquisition?
Was the party conveying the property, presumably to your client's company, connected to your client or his company?
What legal paperwork do you/ does your client have?
Have you confirmed company has title to the property, I would not trust its inclusion in the accounts of the company as proof that was the case?
Did this happen before/after March 1982?
Yes, indexation likely applies if owned by company.
Do you have costs like stamp duty/legal fees etc?
What, if any enhancement of asset post acquisition?
ER is very off point if owned by a limited company.
Goodness gracious.
With respect, you clearly need to pass this client on to somebody who is competent to deal with it. Your initial query and subsequent follow ups show a worrying lack of basic knowledge and any mistakes will be very costly to your client and potentially yourself.
Given what has gone on before, are you happy that you weren't correct first time round with the 28%?