Value of a garden office on private land?

Buying back business assets before sale of business

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A client is selling their business and will be buying back any business assets before the completion of the sale.  Most of the assets are straightforward to deal with but a question mark is hanging over what to do with the garden office self-contained temporary stucture which was purchased by the business but sitting in the garden of the home of the business owner.  How does the owner buy this back?  How do you value it?  Most of the costs of the building were relating to labour although, obviously there are some material costs.

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By Duggimon
19th Jan 2024 11:39

With these types of transaction it would usually be the market value of the item in question you'd look to. Of course, as this 'property' carries with it no rights of access, presumably isn't a property in it's own right despite being permanently affixed to the ground, isn't registered with the council, isn't separately insurable and isn't in fact useable by anyone other than the owner of the house, it isn't in fact worth anything other than the value of salvageable material.

Which all rather points to the company ownership of it in the first place as being something of a tax wheeze. Unless of course my assumptions are all wrong, in which case you'd value it at what other similarly sized commercial premises are going for in the area.

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Replying to Duggimon:
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By ShellLow
19th Jan 2024 11:47

This is super helpful thanks. Although the company paid for the materials and installation of the building and it is an asset in the balance sheet, no capital allowances etc were claimed as it is a building. My gut feel is that the only value is the actual materials of the building.

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By Tax is always taxing
19th Jan 2024 11:53

That's a bit of a jump, not convinced that was the way he was leading you.

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By FactChecker
19th Jan 2024 14:59

".. something of a tax wheeze .." = (via my interpretation) OP, you may need to revisit the company accounts with regard to how this 'office' was treated therein.

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Replying to ShellLow:
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By David Ex
19th Jan 2024 11:58

ShellLow wrote:

This is super helpful thanks. Although the company paid for the materials and installation of the building and it is an asset in the balance sheet, no capital allowances etc were claimed as it is a building. My gut feel is that the only value is the actual materials of the building.

What exactly is meant by “temporary” structure in your OP? Is it moveable, in a practical sense?

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Replying to David Ex:
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By ShellLow
19th Jan 2024 12:03

I believe they mean it isn't a permanent fixture, it can be demolished and then the garden just 'made good' and it is back to how it was

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Northumberland flag
By MJShone
19th Jan 2024 12:00

If it's the sort of wooden structure that it's possible to dismantle and sell (depends how big it is), what would someone buy it for?

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By SteveHa
19th Jan 2024 12:56

There are other potential tax implications, and non-tax implications here, especially if there are any plans to sell the home, or if the local authority get wind of the arrangement and business rates haven't been considered.

You need bespoke advice.

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Replying to SteveHa:
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By lionofludesch
19th Jan 2024 13:30

Sounds like this building is in a minefield.

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DougScott
By Dougscott
21st Jan 2024 10:45

Surely you would have depreciated it to NIL value by now?

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