Contents - Tax Dos & Don'ts for Property Companies

About James Bailey

About This Guide

1.      Choosing the Right Structure

1.1. Sole Trader

1.2. Partnership

1.3. Limited Company

1.4. Types of Partnerships

1.4.1. A “Limited Partnership”

1.4.2. A Limited Liability Partnership (known as an LLP)

2.      Getting to Grips with Limited Companies

2.1. The Different Types of Limited Company

2.2. The Basic Rules for a Company

3.      Understanding Corporation Tax

3.1. The Rates of Corporation Tax

3.2. The Effect of Associated Companies

3.3. Reducing the CT Bands

3.4. Key Dates for the Company

3.5. Benefiting from the Favourable Company Taxes

3.6. Extracting the Cash from the Company

3.6.1. Paying A Salary

3.6.2. Paying Dividends

3.6.3. Paying Dividends and A Salary

4.      Building up a property portfolio using a company

4.1. Using a Company to Grow Your Property Portfolio –  a Detailed Case Study

5.      Using a Property Management Company

5.1. Starting the Property Management Company

5.2. Growing the Property Management Company

5.3. Getting the Cash Accumulated Out of Management  Company

6.      Everything you need to Know About Dividend  Payments

6.1. Working with “Distributable Profits”

6.2. Proportioning the Dividends

6.3. The Two Types of Dividend

6.3.1. A “Final” Dividend.

6.3.2. An “Interim” Dividend.

6.4. Getting the Paperwork Right

6.4.1. Sample – Meeting Minute

6.4.2. Sample – Dividend Voucher

6.5. Two Pitfalls to Avoid when Making Dividend Payments

6.5.1. Illegal Dividends.

6.5.2. Timing of Dividends

6.6. Using Dividend Waivers – An Effective Tax Planning Tool

6.7. Watch out for the “Settlements” Legislation

7.      The Property Development Company

7.1. The Property Developer

7.2. Companies and Property Developers

7.3. The Construction Industry Scheme (“CIS”)

8.      Incorporation Relief

8.1. Transferring Assets into Your Company

8.1.1. Holdover Relief for Gifts of Business Assets

8.1.2. Incorporation in Exchange for Shares

8.2. Watch Out for Three Pitfalls

8.2.1. “Preordained Series of Transactions”

8.2.2. Stamp Duty Land Tax

8.2.3. What is a “Business”?

8.3. Incorporating an Existing Property Investment Portfolio

8.4. Incorporating an Existing Property Development Business

9.      Taper relief for CGT

9.1. Taper Relief for Business Assets

9.2. Taper Relief for Non Business Assets

9.3. What is a “Business Asset?”

9.4. What is a “Qualifying Company?”

9.5. Business Taper Relief and Commercial Properties

9.6. Business Taper Relief on Shares

10.   Reinvestment Relief

10.1. Property Investors and Reinvestment Relief

10.1.1. Business Assets

10.1.2. Furnished Holiday Lettings

10.2. Deferring Capital Gains by Reinvesting

10.2.1. Enterprise Investment Scheme (EIS)

10.2.2. Corporate Venturing Scheme (“CVS”)

11.   Two Property Tax Pitfalls

11.1. When is a Partnership Not a Partnership?

11.1.1. Why Does it Matter?

11.2. How Limited is Your Liability?

12.   Close Companies

12.1. What is a Close Company?

12.2. Special Rules for Close Companies

12.3. The Meaning of a “Distribution” From a Close Company

12.4. Loan to a Participator

12.5. What is a CIC?

13.   The Directors’ Tax Liabilities

13.1. Tax on Non-Cash Benefits

13.2. Expenses

13.2.1. Travelling expenses

13.2.2. Cars

13.2.3. Using Your Own Car for Business

13.2.4. Using Cars for Sole Traders and Partnerships

13.2.5. Three Important Differences to Remember

13.3. Other Expenses

13.4. Dispensations

13.5. Shares as Rewards

13.6. FOUR Tax Free Benefits

14.   Companies and Tax Investigations

14.1. “Aspect” Enquiries

14.2. “Compliance” Enquiries

14.3. Full Enquiry

14.4. “Grossing up”

14.5. Company Investigation Settlements

14.6. Disclosure

14.7. Co-operation

14.8. Size and Gravity

14.9. Watch out for the COP 9

14.10. Four Golden Rules of Tax Investigations

15.   Getting Your “Tax” Exit Strategy Right

15.1. Everybody Has an Exit Strategy

15.2. The THREE Most Common Exit Strategies

15.3. Selling the Business

15.3.1. Benefits of Buying the Shares in the Company

15.3.2. Drawbacks of Buying the Shares in the Company

15.3.3. Benefits of Selling the Shares in the Company

15.3.4. Benefits of Selling the Company’s Assets and then Liquidating

15.4. Selling the Company’s Shares

15.4.1. “Earn-outs”

15.4.2. “Employment-Related Shares or Securities”

15.4.3. Payments Under Warranties and Indemnities

15.4.4. “Compensation for Loss of Office”

15.4.5. Pre-Sale Tax Planning

15.4.6. Company Purchase of Own Shares

15.4.7. Timing

15.4.8. Gifts to Spouse

15.4.9. Substantial Shareholding Exemption

15.4.10. Post Sale Tax Planning

15.4.11. Tax Shelters

15.4.12. Losses

15.5. Sales of Assets and Liquidation of Company

15.6. Dividend versus Liquidation

15.7. How to Liquidate a Company

15.7.1. A Formal Liquidation

15.7.2. An Informal Liquidation

15.8. Dying in Harness

16.   Inheritance Tax and Companies

16.1. IHT – the basics

16.2. PETs

16.3. Gift With Reservation of Benefit

16.4. Spouse Exemption

16.5. Business Property Relief

16.6. How to Lose the Spouse Exemption – (Not  Recommended)!

16.7. Close Companies and IHT

17.   International and Offshore Companies by Daniel  Feingold

17.1. About Daniel Feingold

17.2. Watch Out for the Single Solution Approach

17.3. Using an Offshore Company

17.4. The SEVEN pitfalls of using an Offshore Company

17.5. Using Local Companies

17.6. Using a Double Tax Treaty to Your Advantage

17.7. CM&C and Local Companies

17.8. Using a UK Company to Buy Overseas Property

17.9. Foreign Branch Tax Rules

17.10. Associated Company Rules

17.11.Understanding Foreign Tax Rates

17.12. Extracting Money from Your UK Company

17.13. Using Two Companies

17.14.Using a Nominee Company

17.15.FURBS

17.16.A Final Word