We have a client who owns 100% of a trading company, they also personally own the trading premises.
The trading premises have been leased to the company at a zero rent for a lengthy period.
During this period the company has made property improvements in the region of £150k and claimed Industrial Buildings Allowance in the amount of £73k, the balance of the IBA pool of £77k was written off when these allowances were withdrawn on 1st April 2011.
The client recently sold the property and the trading company recently sold the trade and equipment. There was no amounts apportioned to the Property improvements on this sale.
My question is how does the trading company (or the client) obtain tax relief for the property improvements?
1. Does the company have a capital loss on these? If so what is the capital loss is it the £150k cost with nil proceeds?
2. Does the fact that IBA has been claimed affect the amount of any capital loss.
3. If the company cannot claim a capital loss can the client pay the company for the property improvements. Thus enhancing their cost of acquisition of the property and reducing personal CGT.
4. The company claimed VAT on the property improvements - what bearing does this have on matters?
I know this is a busy month for everybody but any pointers would be much appreciated.