Ltd company looking to transfer property

Company wants to make new company which will own the property, in case of liquidation.

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Hello,

I have a client who owns a succesful Ltd company that works in the engineering sector. This company owns property which is used as its main office. The client would like to set up a new company which would own the property, so that this property could not be taken from my client in the case of his Ltd company's liquidation.

He told me this on a telephone call and asked for generic advice about the logistics of actually doing this. I told him that he would have to sell the property at market value, and that this would have implications in terms of CGT and Stamp Duty. I also told him that there would be legal costs and conveyancing fees too. In terms of funding the acquisition, as the Ltd company has a lot of money in the bank, I told him that an inter-company loan could be possible, otherwise he would have to think about how a new company, with no real credit rating, could get a mortgage.

The client thanked me and said he would consider everything I said, but emphasised that it's just a distant idea right now.

So my question is, what general considerations did I not mention to my client? 

 

Any advice would be much appreciated as I must admit that this question is not one I was prepared for.

Replies (6)

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ALISK
By atleastisoundknowledgable...
05th May 2018 23:52

He has a profitable company that he suspects is going to be hit with a (at a guess) Creditor’s Liquidation? Something doesn’t make sense.

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Replying to atleastisoundknowledgable...:
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By l_davies93
06th May 2018 06:26

He was very vague on the phone so my guess is that either he's starting to think of retirement, or he's just being extra cautious.

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Replying to l_davies93:
ALISK
By atleastisoundknowledgable...
06th May 2018 09:08

Or he knows something you don’t ...

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By Tax Dragon
06th May 2018 09:11

It's not unusual to want to separate property assets from TradeCo. It's also best to do it well in advance of a potential sale, retirement or whatever.

It's also not unusual for people to ask tangential questions and not say what they are really thinking. It happens all the time in here.

Might be worth having another "general" chat with the client to see what's really on his mind. Then you can consider what he should do, without being led by what he thinks he should do.

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Replying to Tax Dragon:
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By l_davies93
06th May 2018 10:17

Thanks a lot,

I do very much appreciate your message and completely agree. In the meantime, what topics should I be reading up on in preparation for any future discussion?

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By johngroganjga
06th May 2018 12:44

The simplest solution is likely to be to create a holding company, and then dividend the property up to it.

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