How to transfer assets from partnership to Ltd Co

How to transfer assets from partnership to Ltd co after just two weeks of trade.

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After two weeks of trading as a partnership a business decides to incorportae.

Having drafted a set of partnerhip accounts for the two weeks of trade I'm unsure of the best way to treat the assets.

I've got £19k Leashold and only £300 worth of equipment. No CA on Leashold and none on equipment as it is period of cessation.  Expecting market value to be pretty much the same as purchase as only two weeks have past. Could maybe agrue a small reduction but not likley material. Therefore not expecting any balancing allowances/charge in partnership accounts and thus dont see the need to complete S266?

No deprecaition put through as not material so showing in cessation accounts at cost.

Presuming can be brought into Limted Co thorugh DLA at cost? Can I claim AIA's? Obviusly not for the leasehold but for the equipment. I know only £300 but just want to check overall that I am treating the whole transfer correctly? Such a pain for just two weeks.

Thanks in advance.

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paddle steamer
By DJKL
22nd Feb 2017 09:54

Surely the most important thing is ensuring the company has a legal right to use/occupy the leased premises? (presume leased by/ held under licence by the partners or one of the partners as an individual)

Until it has such a right not sure how you can consider transferring the leasehold improvements (I presume that is what you mean by leasehold) to the company-if the company has no rights to use the premises surely it can have no leasehold improvements in its balance sheet?

So, step 1, read the lease/licence, determine who holds?

See if sublease or assignation permitted (there will likely be a cost)?

Consider lease term,then see what these leasehold costs are and consider how they are to be treated for tax?

Also remember the landlord may only agree transfer to a shell company supported by a personal guarantee (that would likely be my stance-that or a very big deposit), every case is different. The cost of drafting guarantee together with new lease/assignation docs/similar will likely rest with tenant

The problem people overlook is that leasehold improvements etc are not always within their control to sell/transfer at a whim, they may have paid for them but as they attach to property owned by another it is quite likely the landlord has a significant say whether an assignation or a sub lease will be permitted.

Maybe take professional advice from a good agent/solicitor, worst case Landlord plays hardball to agree to an assignation/sub lease-he has a price!!

(As we have a different legal system re land tenure here in Scotland I doubt I can really add anything further re the mechanics and practical steps required to resolve, just be careful; we in the main are pleasant landlords to our tenants, that is not always the case, there are some complete b**t***s out there)

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