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Gifting a property to a company - tax implications

Want to gift main residence to family contolled Scottish company and continue to live in it

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A client has approached me with an idea to do this, apparently he'd read something on an internet forum but he did not feel the suggestions freely given there were adequate and anyway the discussion had descended into one of those unpleasent accountants' spats, as they so often do. Please discuss with reference to specific sections of tax legislation, I don't need general guidance thank you. Nor do I require any suggestions to obtain paid advice from a suitably qualified tax adviser, as I have read this website's terms and conditions and understand that I can not rely on anything you post here.  All I ask is that you don't try and score points off each other and instead, provide support and challenge to your peers rather than criticism, and to see their point of view, and build a concensus (based of course on  interpretation of the relevant legislation). If you haven't got anything constructive to say, don't say it. Unless its funny, which I shall be the judge of because its my thread. See you in 30 minutes.

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By Tax Dragon
29th Jan 2021 16:20

:-)

(I assume I was allowed to "like" inside the 30 minutes? Obviously I cannot comment in that time, except to say that, if you found anything I said in the other forum to consist of point-scoring or criticism, or to be less than constructive, then you misread me completely. Please re-read in the context of support and challenge, for my peers and for the forum as a whole, and I think/hope you will realise the truth of that claim.)

One instant thought: doesn't that potentially give rise to a BIK?

Edited to change "apologise" to "say". An apology may be due if anyone took offence. None was meant.

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By Wanderer
29th Jan 2021 16:26

Quote:

Gifting a property to a company - tax implications
Want to gift main residence to family contolled Scottish company and continue to live in it
A client has approached me with an idea to do this, apparently he'd read something on an internet forum but he did not feel the suggestions freely given there were adequate and anyway the discussion had descended into one of those unpleasent accountants' spats, as they so often do. Please discuss with reference to specific sections of tax legislation, I don't need general guidance thank you. Nor do I require any suggestions to obtain paid advice from a suitably qualified tax adviser, as I have read this website's terms and conditions and understand that I can not rely on anything you post here.  All I ask is that you don't try and score points off each other and instead, provide support and challenge to your peers rather than criticism, and to see their point of view, and build a concensus (based of course on  interpretation of the relevant legislation). If you haven't got anything constructive to say, don't say it. Unless its funny, which I shall be the judge of because its my thread. See you in 30 minutes.


There's your thirty minutes gone.
Oh and also you mistaken thought that you have the right to control replies.
Don't know much about Scottish tax but don't they have ATED up there?
Anyway think the question is a wind up.
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Replying to Wanderer:
A Putey FACA
By Arthur Putey
29th Jan 2021 16:27

It says I have until 16:33?

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Replying to Arthur Putey:
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By Cheshire
29th Jan 2021 16:31

Are you going to '.' the OP?

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Replying to Arthur Putey:
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By Wanderer
29th Jan 2021 16:34

What does? And to do what?
Just seen this thread going on today:-
https://www.accountingweb.co.uk/any-answers/benefit-in-kind-charge-in-li...
Its it a coincidence that Chicm's company Straan Capital is Scottish?
Gotta admire their persistence.

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Replying to Wanderer:
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By Tax Dragon
29th Jan 2021 16:39

In that thread I invited Arthur to start his own thread.... this is that thread. (You'll catch up soon, I have no doubt :-).)

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Replying to Tax Dragon:
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By Wanderer
29th Jan 2021 16:50

Sorry, just caught up, hadn't seen that other thread! Just read through it. Anyway I'm off to do what I've just posted in that other thread.

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Replying to Arthur Putey:
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By Tax Dragon
29th Jan 2021 16:37

Wandsie meant your pre-edited words would be preserved in a quote. Like in the old days.

I was kind of hoping the time-limited edit would reduce the need to do that. It's painful enough reading some stuff once. Don't want to have to read it all again!

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paddle steamer
By DJKL
29th Jan 2021 16:59

I would not have dealt with a client merely answering their question asked, step one with me always has to be to ask why, as courses of action tend to have costs, either real money paid out or the decision taken compromising options and biting back ,even one or two generations later. For that reason, and the curtailment of these options, I cannot contribute.

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Replying to DJKL:
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By Tax Dragon
29th Jan 2021 17:09

Which (serious hat on) is why that type of question is (and so many others that get asked in here are) best dealt with by an advisor, not in a forum. [You do say things much better (less abrasively) than me. I. Whatever.]

Arthur, some starters for 10 are listed in the other thread. Did you actually want to follow up on any of them/others that are not listed?

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Replying to Tax Dragon:
A Putey FACA
By Arthur Putey
29th Jan 2021 18:45

The particular sections would be nice :-) But there would be a lot of them if you went down your list of:
Some issues:
gift is immediately chargeable to IHT - the earlier gifts may have been too
GWROB
POAT
LBTT
CGT
BIK
Effects on company
Effects on shareholders

Why not ask the OP why they want to do it that way and go from there? Don't let the tax tail wag the dog and all that. Oh, that would involve generalism before getting into the specifics. Something people with a wider perspective tend to do. Experts in the specifics sometimes don't look at the bigger picture. To do so would risk giving "damaging" "faux-advice". Except that it isn't "advice" (in the professional sense). No advice is given here, other than the override that professional advice should always be sought. What might be "damaging" would be to say, "Go and ask your question on ukbusinessforums", or "Not if you don't tell anyone you are living there".

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Replying to Arthur Putey:
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By Tax Dragon
29th Jan 2021 19:31

Arthur Putey wrote:

Why not ask the OP why they want to do it that way and go from there?

In case you missed it, you did (sort of) ask - OP thought you had anyway because he told you. I didn't notice it spark any great response from you. And in case you hadn't realised, OP's only concern was tax. There wasn't a dog, just the tail.

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Replying to Tax Dragon:
A Putey FACA
By Arthur Putey
30th Jan 2021 13:11

And the point (sort of) of my asking him was to suggest he considers the dog. After all, its not just for Christmas ........

I'm half tempted to write up an idealised (well in my view anyway) example of a Q and As, where having posed his question the OP is gently guided through a journey and ushered through the exit with some points for discussion with his existing or new adviser, leaving us with the other 95% of the more basic questions such as what box on the TR something goes in, or how do I tell my a--- from a hole in the ground.

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Replying to Arthur Putey:
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By Tax Dragon
30th Jan 2021 16:30

Arthur Putey wrote:

I'm half tempted to write up an idealised (well in my view anyway) example of a Q and As...

I think you should. (Or we should together.) Genuinely. Seems to me one* of us is a bit deluded and I'm not sure which. This could help us see each other's viewpoint more clearly.

In my mind, I can only get so far through the imagined conversation, thus:

OP: I'm gonna gift my home to my children's company, carry on living there, I don't care about any tax - apart from BIK. Would there be a BIK?
AP: Why would you do that?
OP: It's just kind of neat that way. I've gifted lots of other property to the company before. Now I don't have to pay tax on any of the income!
AP: Aha, but you don't have any of the income. You said you didn't care about tax anyway. And you're right - it shouldn't wag the dog!
OP: Nice analogy. And you're right about the income. I wish I'd thought about that first - but I still have enough left. Anyway, this is my home I'm gifting now so I'm not losing any income. And I might save some costs!
AP: That's right - the company would be liable for maintenance. And don't forget you get PRR on the transfer.
OP: Great! I'll get on with the gift.
AP: No, wait, let's talk about that dog.
OP: OK, well, you can see it would be neat to have it all in one place. And you can see the benefits.
AP: Yes, but have you thought about**

*Could of course be both.
**You need to take over here. I'm fixated on the horrific (sorry, I mean specific***) tax consequences. I don't have your bigger picture skills.
***FWIW, "specific" does not mean "here are some specific section numbers"; it means situation-specific, case-specific, fact-specific, intention-specific, dog-specific. It means what DJKL said better than me above.
****One edit I would make to my comments yesterday: I would remove the words "from you" after "great response". "From you" was unnecessarily personal (for which I apologise). Worse than that, it was otiose. Worse than that, it distracted from what I was trying to say.

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RLI
By lionofludesch
29th Jan 2021 18:45

Love these spoof threads.

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Replying to lionofludesch:
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By Paul Crowley
29th Jan 2021 22:27

Makes the day worth while

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Red Leader
By Red Leader
30th Jan 2021 12:42

Freeloader.

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By Tax Dragon
31st Jan 2021 09:45

Arthur, I've spoken about you (and borrowed your dog/tail metaphor) here: https://www.accountingweb.co.uk/any-answers/grants-for-training.

My concern - as is yours - is about the responses this forum 'should' provide. We are on common ground there. There's nothing personal going on here, I hope, but I did 'name-drop' you, and thought in fairness I should mention that to you. (Paul name-dropped me in the same thread and I almost didn't notice.)

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