Is this a benefit in kind?

Is this a benefit in kind?

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.....(all adults in their mid twenties) to buy a plot of land between them with the intention of building 3 apartments on it, in which each of them would live or rent out. His own company would undertake the construction work and charge for it at 'arms length' he says. Would this arrangement give rise to a benefit in kind on the basis that the 3 children will each acquire a flat 'on the cheap' through their association with the developer; as they avoid having to pay the profit element to the developer had his company bought the land, constructed the flats and sold them on the open market, as it does with other customers. He has obviously made an exception for his children.

Readers views would be much appreciated.

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By Andywho is fed up
01st May 2014 20:39

Sorry, but I don't follow the argument.

The children all buy the land, presumably at market value, from a 3rd party.  Then father's company builds the properties and charges them an "arms length" price for the construction.  So where has anyone received a benefit?

There is no development "on the cheap" unless somewhere in the process the children are  buying something at an under value.

Can you give more details of where you think this is happening?

 

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By johngroganjga
01st May 2014 21:20

I think the OP means the developer is giving up the turn he would normally make on the land element. Presumably he is introducing the opportunity to buy the land to his children.

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Stepurhan
By stepurhan
02nd May 2014 08:43

The summary is not the question

Your question appears to start part-way through a sentence. The reason for this is that you have put the first part of the sentence in the question summary. Not everyone will see the question summary, so you really need to edit that bit into the question itself.

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By Mike Smith1
02nd May 2014 11:10

Sorry Andy, just to clarify.......it is as John has described above; the developer (father) has given up the chance to make a profit on the land. Historically his company has always bought the land and built the houses/apartments, until now when his children are involved.

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By Steve Kesby
02nd May 2014 12:53

There is a benefit...

... but the amount of the benefit is the cost (actual cost not opportunity cost), including any VAT (whether or not it's recoverable), to the company in providing it, which would appear to be nil.

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