Taxation
Selling Property and Sheltering Tax
We were approached for advice by a property investor with a significant portfolio, who was contemplating selling a large development. He had sought advice elsewhere but was looking for commercial and effective tax advice. We were pleased to assist and advised upon a straightforward arrangement which provided a commercial framework going forward for the properties being retained and yet sheltered the tax on the property sold which was in excess of £300,000.
Retaining and Incentivising Key Individuals
We were approached for advice by the owners of a rapidly growing business who wanted to retain and incentivise their key people by providing them with shares in the Company,
As giving shares can give the individual a tax liability, without the cash to meet it, and create issues if things do not go to plan, we advised the setting up of a share option scheme. No tax issues arose and if the employee left the option would lapse.
What in fact happened was that the business was sold allowing all to share in their success whilst securing a low rate of tax. The added benefit for this particular client was that the exercise of the options received generous tax relief which added over £1 million to the consideration received on sale.
Tax Enquiry
We encountered a situation whereby a client sold his business following which we completed the tax computations relating to the disposal.
The client then received an enquiry from HM Revenue & Customs advising him that a previous agent had made a claim to rollover a capital gain at the time the business was acquired, a number of years previously. This meant an increased tax liability and the Inspector was seeking a penalty,
From the revised computations, due to issues of timing, it was clear that losses arising were not able to be set against the capital gain. However, we decided to look at it again and by reviewing the management accounts we were able to make use of a little known tax rule. Having extended the accounting period, this allowed us to restate the computations and set the losses against the gain. The Inspector at first was somewhat reluctant but after some persuasion agreed to the adjustment which resulted in a tax saving of £12,000.
Being prepared to look a little harder for a solution to an unexpected problem paid dividends.