Individual owns a piece of land c2 acres which is used by his profitable personal trading company as a yard. The company has spent c£200k over the past few years erecting a shed and an office unit. The director now wishes to formally transfer the land and buildings thereon to the company in order that he can take cash from the company at a relatively low tax rate (10% CGT if we do this correctly). The land is valued at £180k and the land & buildings together are valued at £320k.
I do wonder about the legal position as well as a potential tax issue --- the company has spent money on "leasehold improvements" and recognises such in its own accounts, but there is no lease. Does the director therefore have the legal right to transfer ownership of the buildings given that they were paid for by the company?? My view is that buildings form part of the land unless a lease or an agreement suggests rights otherwise.
Could HMRC argue that if he did this transfer at full £320k, then the company has inadvertadly made distributions to the director/shareholder each time it improved his personal asset by constructing a shed etc...??
It may also then be appropriate to thereafter move the land (and buildings?) into a SIPP as a contribution in specie.. but thats for another day..