GETTING THE RIGHT ADVICE

When buying a property the importance of structuring the acquisition correctly cannot be under estimated to prevent an unexpected or high tax assessment when you sell it. Getting expert advice before you invest in, develop or buy a property for your own use can generate very substantial tax savings as well as provide the most suitable structure to meet your long term business or personal plans.

THE ISSUE

We were approached by a property investor and developer with a varied portfolio of properties valued in excess of £30 million. Ad hoc advice received over the years meant they were owned by a mixture of individual and joint names, limited liability partnerships and companies. As well as the structuring issues, tax implications had not been thought through, as the interest and other costs during the early period of ownership exceeded income and hence tax hadn’t been an issue. However, the unplanned sale of a property meant that tax losses were not available to prevent a 40% tax liability.

THE SOLUTION

One of our property specialist partners spent time with the investor and developer to identify their vision and develop a strategic plan for the future. The plan was to:

• Develop a hardcore of medium and long term property investment with occasional sales generating capital gains
• Build up substantial development activity and value in a vehicle where long term value was more important than immediate extraction of cash for a minimum tax
• Bring in external investors on a development by development basis

With this strategy in mind we introduced a number of measures to minimise the tax exposure, including:

• Introducing corporate members into limited liability partnerships with flexible profit sharing arrangements to minimise tax liabilities
• Structuring refinancing so that no interest became disallowable for tax
• Setting up structures that facilitated external investment without stamp duty land tax issues arising
• Structuring the balance of the portfolio to trigger a minimum tax rate on exit

HOW WE WORK WITH YOU

We will provide you with the right advice at the right time in order to make the maximum financial impact. We do this by providing you with a Partner who is accessible, who will take the time to understand your business and who will co-ordinate a team of accounting, tax and audit specialists to successfully meet your objectives.

ABOUT KINGSTON SMITH'S PROPERTY TEAM

Kingston Smith is the fastest growing top 20 firm of Chartered Accountants. Our property team have considerable experience in the property sector and work with clients in development, construction, investment and management. We help these clients run their businesses more successfully by providing practical advice such as planning ownership structures to minimise their tax exposure, accounting services ranging from bookkeeping, management accounts to the preparation and audit of year end financial statements to improve financial efficiency and helping source alternative methods of funding.

To find out more about Kingston Smith's bespoke services to the sector click here

CONTACT US

Kingston Smith Property Team 

Martin Muirhead  +44 (0) 20 7566 3705 
Heather Powell  +44 (0) 20 7566 3811
David Benton  +44 (0) 1708 759 701 
David Montgomery  +44 (0) 1737 781 545
Jonathan Seymour  +44 (0) 20 8848 5531 
Nigel Birch  +44 (0) 1727 896 006

Funding advice is provided by Blacktower Financial Advisers Limited, who are part of Kingston Smith.  Blacktower Financial Advisers Limited is authorised and regulated by the Financial Services Authority.  The FSA do not regulate tax advice, investment in commercial property or commercial mortgages.