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Is a solicitor required to transfer property?

Transferring a residential property from parent to subsidiary

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There are 2 properties in a company (parent).  To transfer one of the two which is a residential flat into another company a 100% owned subsidiary of parent has been set up to avoid CGT and SDLT.

Process seems straight forward since the residential doesn't have a mortgagor i.e. subsidiary incorporated, to submit SDLT documentation and change legal owner with Land Registry.  Am I missing something?  Will a solicitor be required?

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By Wanderer
19th Aug 2021 18:26

I see that you have been a member here since 2012, have a number of companies, a number of properties, investments in publicly listed companies & have received tax advice for free. You were also developing a block of flats & reaching retirement age & were seeking advice on trusts & transferring assets to your sons.

You are asking if you are missing something. The answer is yes, the value of proper paid for advice from both an accountant & a solicitor.

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By Paul Crowley
19th Aug 2021 19:01

Is this really the full story?
Or will subsidiary be given its freedom?

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Replying to Paul Crowley:
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By jakeman
20th Aug 2021 09:16

Subsidiary will remain a subsidiary

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By DKB-Sheffield
19th Aug 2021 21:01

Hi

Firstly, you seem to have posted your question on the wrong forum! If you are looking for advice in relation legal transfer of a property, a legal/ property specialist forum would be more suitable.

Secondly, you may consider approaching the corporate structuring/ tax specialist you approached (or should have approached) prior to putting this new structure in place. They will have a much better understanding of your case than anyone on here!

In response to your question, FILING a TR01 form IS straightforward. You clearly need to know exactly what to put on the form, ensure the correct due diligence has been carried out (possibly details that were missed, didn't exist or were not required when you purchased - gas cert, electric cert, EPC etc.) and accept that YOU will be responsible entirely for any errors or ommissions.

In the same light, filing accounts and tax returns is the simplest thing most of us on here do - it's just a case of clicking a button. What we are paid for is knowing what to put where AND spending hours giving insured advice to clients in order that we may get to that stage. A conveyancing solicitor is the same - they don't get paid "simply for filing forms".

My advice - leave it to the professionals. Aside from that, I am neither insured to, nor authorised to offer advice on whether you should do this yourself!

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Replying to DKB-Sheffield:
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By jakeman
20th Aug 2021 09:18

Thank you. The structure is implemented by our accountant who suggested a hive down into subsidiary to avoid CGT and SDLT. Can you suggest a reasonable solicitors firm?

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Replying to jakeman:
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By DKB-Sheffield
20th Aug 2021 13:52

Hi

I know a number of solicitors in my local area who specialise in property transactions (one of whom is family). However, I don't know of any that will simply file the relevant return and deed without carrying out due diligence on you, the property and the transaction. They wouldn't be willing to carry out a cheap "no questions asked" form-filling exercise for a complete stranger. To paraphrase, they're not what you are looking for!

Incidentally, what is your accountant advising? I assume he/ she has talked through the options with you - and he/ she may have valid reasons for their suggestions. They know you, your company, and the property - they are therefore generally the best ones to advise on moving forward. Perhaps you don't like their response but, you don't give any explanation of their advice or their reasons for it.

There are so many considerations and we know very little from your question. Is the property leasehold/ freehold/ floating freehold (thus is involvement of a freeholder required)? Are there any restrictive convenants that need to be discharged or included in the new deed? Have any prior charges been discharged (rare occassions but it doesn't always happen!)? Are there any rights of way/ easements? You state there is no mortgage but how will SubCo finance the 'new' asset (if "loan" from HCo will it want some form of security/ charge over the property?

Also, and from a tax perspective, are there any IHT issues regarding the shares of HCo (and ultimate classification as primarily 'trading' or 'investment') which may have been prevented by having 2 separate companies as opposed to a group structure (SDLT and CGT may be less onerous than IHT). SubCo is almost certainly 'investment', not sure whether HCo is 'trading'. It may have no relevance to the case as we don't have the full detail (nor should we as it is beyond the scope of this forum).

Finally, I disagree that solicitors are entirely pointless, in the same way as I argue tax advisors/ accountants are not pointless. It depends on the user of those services! If one has a decent enough grounding in company and property law, the argument that a solicitor carries out a 'form filling' role may be somewhat justified. However, when a user of a solicitor's services has doubts (and seeks answers to those doubts through an accountancy - not legal/ property - site), the solicitor's advice and actions are invaluable. I certainly don't hold that the only reason a solicitor charges high fees because they have to cover due diligence - any more than I believe my own fees would significantly reduce were AML/ due diligence no longer required.

I stick by the answer, you need a solicitor but, if you feel they are too expensive (set against any tax efficiencies you will make) you can 'go it alone' and be ready to take one of the many future consequences. The fact you are having to ask the question as to "whether it is possible" (a question asked all over the UK web) at all would suggest proper legal advice is highly appropriate.

N.B. Incidentally, I have done similar in the past (very simple sale of property to family at MV), and did find it straight forward - as an accountant with a knowledge of, and ability to interpret law. However, I also have a family member who is a conveyancing solicitor who I turned to regarding a query with a restrictive covenant.

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By The Dullard
19th Aug 2021 21:08

Solicitors are a superfluous commodity, IMO. I mean generally. I suspect you'll need one here though. Problem is a solicitor won't be able to talk you through which paragraph of FA 2003, Sch 7, Pt 1 you're going to end up falling foul of.

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Replying to The Dullard:
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By jakeman
20th Aug 2021 09:16

Thank you. Can you suggest a reasonable solicitor? I asked a firm near me and they quoted a ridiculous amount for effectively TR1 and SDLT form submission.

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Replying to jakeman:
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By bernard michael
20th Aug 2021 09:37

jakeman wrote:

Thank you. Can you suggest a reasonable solicitor? I asked a firm near me and they quoted a ridiculous amount for effectively TR1 and SDLT form submission.


How much do you consider is a "ridiculous amount" ??
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By Truthsayer
20th Aug 2021 00:23

Comment deleted, as I realised I was saying the same thing as others.

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By johnhemming
20th Aug 2021 09:33

Reading the comments here I think you need advice on the interplay between the different laws and that is probably best from a solicitor who does company law.

In the past I have done my own conveyancing (I am neither a solicitor nor an accountant). However, I discovered when buying a property in an auction that Anti Money Laundering legislation makes it really difficult to pay the vendors solicitors client account unless the money comes from another solicitors client account.

I recently bought another property and deliberately transferred the transaction to a firm of solicitors part way through to avoid this particular regulatory problem.

That, of course, is not a problem when you are both vendor and purchaser, but it looks like advice would be a good idea.

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By Justin Bryant
20th Aug 2021 09:47

These are all quite sensible questions in my view (more sensible than average at least). In practice you will need to file an SDLT1 in order to claim SDLT group relief (since SDLT would otherwise arise under s53 FA 2003).

There is no need for a TR1 and a DoT would be sufficient.

Re fees, the problem is that these days there are very time consuming client set-up costs, so fees for even a simple SDLT1 filing from a "proper", competent solicitor (there are many dud ones as we all know) will be around £750 (plus VAT) (a lot of incompetent firms could easily charge at least twice that in my experience). Try:
Frances M White (Miss)
Partner
26 Clifftown Road | Southend-on-Sea | Essex | SS1 1AH
DX: 2810 Southend | Tel: 01702 348384 | Fax: 01702 433424
Web: www.beechamfisher.co.uk | Email: [email protected]

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