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Property Developers Accounts - Good place for CPD?

Property Developers Accounts - Good place for CPD?

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I have been dealing mostly with self employed and normal trading companies for number of years and my focus is mostly on updating my self with these clients in mind. however I have been refusing to take on property developers clients because I am not competent in this area but now I have decided to dig more and concentrate on it for while to get all the info as they think I am too busy to refuse them which is also true :)  

My goal is to get comptence in Residential Property Development using companies and any VAT implications, Tax planning and exit strategies/selling and gifting shares of these companies if applicable. 

For example this last client approached me that I could not take on. 

Husband and wife, bought this old house with a land for  750k. They plan to renovate the house and are in process to get plannig to build 4 house on the land. once the planning is granted they will try to raise finance from the bank and sell all property when completed.  Director loans are about 500k each and the ongoing cost of clearing the land/architect is about 100k by now.

I could treat it as normal trading company, allocate all the cost to the project however I am not confident on how to deal with it when the houses are built and to apportioned the costs etc and what if later on they decided to let it instead.   

Looking for any specialist day/two CPD anyone can recommend or anyone here has very good experience to train/guide me. happy to pay for your time. 

regards

 

 

Replies (5)

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Hallerud at Easter
By DJKL
09th Nov 2019 21:04

The accounting is the accounting- allocate direct costs re each property to stock re that property and work out reasonable basis of apportionment re common costs like drainage, roads, lighting etc plus site overheads/prelims etc.

The catch with what your client say wants to do is there is a fair bit of planning re vat and sdlt here that needs addressed front end, whether structured through one or two companies might be important especially if there is a bit of mind changing/flexibility later etc

I am really not sure there is a suitable course, you could buy a couple of property tax publications, Spencer was one (may now be Crossman) and Maas was the other I used to buy (am not doing much development anymore so we tend not to buy that often), I would read these and then see the vat/sdlt/structuring areas that might need a bit of honing.

https://www.bloomsburyprofessional.com/uk/tax/property-taxes/

They are also doing a property tax conference this month but I expect you need to be sure to have already covered the basics to get much out of it.

https://www.eventbrite.co.uk/e/bloomsbury-professional-property-tax-conf...

The other thing is to get a client referred to a bigger firm where you do all the donkey work and the big firm provides the vision, you can pick up a lot that way and if your client is paying them a fee they will likely spell out areas to you as you are the conduit to the client- I have used a reasonable sized scottish practice for this over recent years and they never tried to steal business.

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By Accountant A
10th Nov 2019 15:16

Agree with DJKL. I think money would be better spent on decent reference materials. You'll never get enough from a one or two day course to make you an expert in the field.

I think you need to "unpack" the issues. Again, as DJKL says, the accounting shouldn't be anything particularly left field. Taxwise, it's going to be SDLT, VAT and CIS which you'll need to be on top of.

It's surprising how many advisers publish useful newsletters/guidance on their websites. If you sat and spent some time Googling and reading, you would probably learn and retain more than you would sitting in an overheated conference room.

"exit strategies/selling and gifting shares of these companies" is not specific to property companies although it's another potential layer of complexity.

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Replying to Accountant A:
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By oldiegoldy
10th Nov 2019 18:08

Thanks all.
Really appreciate your comments.

DJKL wrote:

The accounting is the accounting- allocate direct costs re each property to stock re that property and work out reasonable basis of apportionment re common costs like drainage, roads, lighting etc plus site overheads/prelims etc.

So the basic are that these are normal trading companies and costs are allocated to jobs/property and administrative expenses are accumulated as loses and realised on sale of properties?

DJKL wrote:

The other thing is to get a client referred to a bigger firm where you do all the donkey work and the big firm provides the vision, you can pick up a lot that way and if your client is paying them a fee they will likely spell out areas to you as you are the conduit to the client- I have used a reasonable sized scottish practice for this over recent years and they never tried to steal business.


Thats a brilliant suggestion. Thanks

Accountant A wrote:

It's surprising how many advisers publish useful newsletters/guidance on their websites. If you sat and spent some time Googling and reading, you would probably learn and retain more than you would sitting in an overheated conference room.


I agree. I have been googling this weekend and read few articles, on property specialist accountants and also Found a book by Carl Bayley @taxcafe will be ordering it tomorrow.
I could not find any useful technical article on ACCA sofar but still searching on ICAEW too.
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Replying to oldiegoldy:
Hallerud at Easter
By DJKL
10th Nov 2019 20:25

Re the books the Maas one is the bigger, it ploughs through the areas in sequence, Spencer (as was) was good as it had interesting planning flow charts for each chapter but you really need some understanding of the Maas book first.

When property was all I did (my early years in my present job before I also had a P/T practice) these two books and Taxation magazine were the mainstays of my reading- catch is they are not cheap. (Good tax books are never cheap)

There is another property tax volume from Tolleys which might be used instead of Maas (though I preferred Maas)

https://store.lexisnexis.co.uk/products/tolleys-property-taxation-201920...

I would also find a good vat consultant to refer vat planning to, I find vat and property the trickiest area of planning and 20% vat on some developments can nearly just by itself wipe out a development profit so it is not an area to take risks with ever; very big numbers can be involved.

Anyway good luck, if our governments ever get their acts in gear house building and construction could well be the largest growth industry of the next 20-30 years with lots of planning opportunities.

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Replying to oldiegoldy:
Hallerud at Easter
By DJKL
10th Nov 2019 20:37

Admin costs are more grey, I tend to take to expenses as they occur and only take more direct costs to stock, so materials, labour plus possibly site insurance and site security etc Also remember lower of cost and NRV in a falling market.

I also tend to carry bank charges/interest to P & L.

The main area to consider is if you need to account for long term contracts/WIP, this will get led by the legal agreement re the development, agreed end buyer etc, if mere speculative building lower of cost and NRV will be on point- really just look at the accounting frameworks like FRS102 etc .

If small clients I find if no software re stock control/contract control that distinct stock nominals for each development can be useful.

The other accounting issue can be obligations to do work post sale and sales retentions, on say a small development of house plots for self build you might have the contact re each plot sale with a retention from price for the developer to finish something later, top road surfaces are common, so ensure you see the sale documentation and get the statements from the client's solicitors detailing these things, otherwise it is very easy to miss creditors/provisions/ overstate or understate profit.

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