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tax payable on transfer of listed barn to parents

I bought a barn next to parents on understanding that they would repay once they sell up in 3-5 yrs

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A dilapidated listed barn at the back of my parents home recently came up for sale at auction.  I bought it for them as they didn’t have the ready funds and they had fallen out with the vendor and were concerned he wouldn’t sell it to them, once he worked out who was buying it. (They tried to buy it once before and it fell through because of bad blood between them).  I bought it for my parents  on the understanding that they would pay me back once they sold the house and barn in a few year’s time when they are ready to downsize. 

Is there any reason from a tax perspective why I shouldn’t transfer the ownership of the barn to my parents now (2 months after the auction) whilst simultaneously registering my loan to them as a charge against the property (the loan being the same amount as I paid at auction).   I understand this would necessitate paying stamp duty twice, but as the barn is deemed to be commercial, the stamp duty is very low, and it would simplify matters when they came to sell if both properties were in my parents name.   The barn was bought to protect the amenity of my parents farmhouse, and will be used by them exclusively until they are ready to sell up and move on.

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08th May 2019 14:01

if you have the funds to buy a barn, I reckon you probably have the funds to pay for advice.

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to ireallyshouldknowthisbut
08th May 2019 14:32

Thanks, I have already paid for some advice but it doesn't 'smell right' so I wanted to get some alternative views without running up further costs.

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to Lucy Block
08th May 2019 16:19

It would help then if you would explain what advice you have received and what about it "doesn't smell right" to you.

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to johngroganjga
08th May 2019 17:00

The paid advice was to establish a bare trust with my parents as the beneficiaries with an absolute right to the barn, and myself acting as their nominee on title documents. When I asked why I couldn't simply transfer the barn to my parents and register the loan with Land Registry as consideration, I was told that this might raise suspicions at HMRC that there was some kind of property development angle and that I was seeking to avoid tax on this. Given that I would transfer the barn at the same price I paid for it, I can't understand what tax would be due and therefore what tax I would be avoiding? I am also concerned that the complication of continuing to hold the barn as a nominee for my parents will cause difficult questions from HMRC when my parents come to sell both house and barn, as I will still be the legal title holder according to Land Registry records at sale.

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to Lucy Block
08th May 2019 17:19

The weakness in what you have been told is that HMRC’s suspicions would be unfounded and could easily be rebutted (assuming there isn’t something important that you have not told us).

So I can see no reason for not going ahead with a transfer of the legal and beneficial interest to your parents.

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to johngroganjga
08th May 2019 18:20

Thank you very much for taking the time, that is what I thought, the advice seemed to be making matters unnecessarily complicated for no good reason.

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to Lucy Block
09th May 2019 06:41

There's no tax difference between using a bare trust and transferring the legal title, so I agree with John.

Presumably the advice you took told you what the tax consequences/risks are.

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to ireallyshouldknowthisbut
08th May 2019 14:42

Has the amount of individuals/companies seeking free advice increased significantly recently. It getting a tad irritating...

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08th May 2019 15:33

the amount hasn't but the number has.......:)

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