Mark Alexander - Founder of Property118

Couldn't you get another free one after five years?... Read More

One of my tenants qualified for a Disabled Facilities Grant to install a new bathroom.

All I needed to do was agree to the work. It didn't cost me a penny.

She has been in the property for over 15 years and the bathroom was becoming tired anyway. My thought process was that if she left I would have to replace the bathroom at my expense to be able to sell or re-let the property, so I had nothing to lose by agreeing.

I checked and I would not be responsible for repaying the grant even if she died or moved out soon after the work was completed.

I also concluded that a home with a disabled bathroom might appeal to a niche market when I do need to sell or re-let the property, so the works not only save me money, they could also help add value to the property as well as helping my disabled tenant to be far more comfortable. She now sees this as her "forever home".

I am now looking into other grant based improvement opportunities for my other properties, for the same reasons, hence this article to share my findings with other landlords.... Read More

Yes I agree.

Family Investment Companies “FIC’s” with freezer and growth shares are certainly worthy of further consideration for you at some point in the future. Sooner rather than later if you plan to acquire further investment property.... Read More

You may find the article linked below helpful

https://forbesdawson.co.uk/articles/2024/07/26/whats-so-bad-about-bridging-loans-in-a-section-162-incorporation/... Read More

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Its only a third party liability if the tenants deposits are held in a custodial scheme.... Read More

Apparently so, (subject to the meaning of business test of course) but we cannot even be certain of that because all landlords will have some form of liabilities, e.g. tenancy deposits... Read More

Are you holding the property on trust for the LLP by any chance? If you are, then in the eyes on HMRC the LLP is the beneficial owner, even if that's not what is recorded at HM Land Registry.

If the whole value of the value of beneficial interest transferred to the LLP was credited to your opening capital account balances proportionality to ownership prior to transfer into an LLP where your spouse is the only other member I don't see any issues with that from a CGT or SDLT perspective.

One of the MANY problems with the Hybrid LLP arrangements advocated by One Consultancy Group (LT4L) was that beneficial interest was transferred to a corporate member without CGT or SDLT being declared.... Read More

I'm interested to understand what your LLP is for, assuming it doesn't own at least the beneficial interest in any property.

Same point as the one being made by Ryan I think.... Read More

Based on what you have said it is unlikely that there is any income shifting on the basis that LLP’s are tax transparent anyway.

What does your LLP do for you?

Is it just a way for you to utilise nil rate bands and both lower rate tax brackets?... Read More

The Hybrid Scheme was reported to HMRC by Property118. It was heavily promoted by Less Tax 4 Landlords and resulted in HMRC’s Spotlight 63.

Property118 would never even consider recommending Hybrid LLP’s unless there was a genuine business relationship between a Limited Company and private individuals each of which owned property prior to the commencement of the Partnership.

Property118 published several Warning articles over a number of years prior to HMRC issuing Spotlight 63. The claims made by Less Tax 4 Landlords simply didn't make any sense. We gave them plenty of opportunities to prove otherwise but they claimed they didn't want to share their “intellectual property”. As time has proven, they never had any intellectual property, just bluff and bluster.

On the flipside, Property118 has always been fully transparent when answering technical questions, including the provision of quotes from and links to legislation, HMRC non-statutory concessions, HMRC manuals and best practice advocated in authoritative guides published by Lexis Nexis and subscribed to by many industry professionals.... Read More

Not necessarily!

If you were to transfer say 50% of the value of your properties to your wife you would normally need to transfer 50% of your mortgage liabilities. That's perhaps how you arrived at your conclusion, because HMRC would regard the mortgage liabilities transferred as consideration for SDLT purposes. There would be no CGT because you are married.

However, whats to stop you transferring say 1%? Would 1% of the mortgage liabilities attact SDLT or would it fall below the threshold?

Are you also aware that the additional 3% SDLT rate does not apply on transfers between spouses?

The above is just one of many options you might have been advised to consider if you wanted to form a Partnership with your spouse. However, forming a Partnership purely to avoid SDLT at incorporation would likely fall foul of the anti-avoidance rules in the Finance Act 2003 schedule 75a. If that was not the ‘main reason’ there are much stronger arguments.

There are much better options than General Partnerships for spouses though in my opinion, especially if separation of business and personal assets and liabilities are important and also if plans to involve family members for business continuity and legacy planning are also important.

To learn more please book a tax planning consultation with us. We are still open for business, but we are not currently recommending incorporation for the reasons already mentioned in this thread.... Read More

Are the married couples engaging in the same business as co-adventurers?

If so, and they also meet the business test, the Paftnership Act 1890 deems them to be a a Partnership.... Read More

It is quite possible that a Partnership would NOT have to pay SDLT at incorporation.

The legislation is Finance Act 2003 schedule 15. The SDLT calculation is known as the “Sum of Lower Proportions”, often abbreviated to SLP.... Read More

I have to be careful what I say, but I did say in a previous comment that there are serious “misunderstandings” contained in the HMRC Stop Notice. It is my firm belief that these have all come about as a result of Dan Neidle’s flawed reasoning, based on him having decided first that we are guilty and subsequently creating a narrative to justify those thoughts, and his strong media influence. There may also be a second element to his apparent sophistry, which is that it appears he had no understanding of ESC D32 prior to launching his attacks and also hadn't considered the expert guidance contained in Simons Taxes. A third possible explanation is that DN was misdirected by people he believed to be experts based on their status and qualifications but who were perhaps even more clueless on the subject of landlord incorporation than himself, possibly professionally envious of at least sceptical or our success too.... Read More

The Stop Notice prevents Property118 from promoting or assisting clients to arrange a Capital Account Restructure.

As a result of this I am no longer able to publicly explain HMRC’s or Dan Neidle’s misunderstandings for fear of being accused of promoting what HMRC currently regard to be an abusive tax avoidance scheme, an accusation we vehemently deny. The guidance we provided is regarded as best practice in the most highly respected textbooks published by Lexis Nexis. We feel it would be madness for any adviser to assist landlords to incorporate until these matters are fully resolved.

The most logical option available to us is to appeal the Stop Notice, and the Scheme Reference Numbers issued under DOTAS legislation, to the Tax Tribunal whilst confidentially responding to only to technical questions raised by existing clients and their professional advisers. We have considered Juducial Review but that route is unlikely to get off the ground due to Tax Tribunals being the preferred alternative to resolving disputes of this nature.... Read More

PS - I am far from convinced that HMRC would accept the “sum of lower proportions” calculation for SDLT purposes either [Finance Act 2003 schedule 15] at incorporation if it deemed there was no BUSINESS.... Read More

That's an interesting perspective because the Partnership Act defines a Partnership as two or more people engaged in BUSINESS.

If the definition of BUSINESS is not met then how can a Partnership exist?

I agree that HMRC will allow a Partnership to be registered, even if no property has yet been purchased. However, when just one passive investment is purchased are you suggesting that HMRC would be happy to allow profits to be shared in accordance with the wishes of the Partners instead of the beneficial ownership? I don't think they would.... Read More

United we stand, divided we fall.... Read More

How can this possibly be an advertisement? What exactly do you think is being advertised? Property118 cannot even assist with incorporations at the moment.

My comments here are simply referring to legislation, HMRC manuals, HMRC extra statutory concessions, and textbooks on best practice published by Lexis Nexis, all for the purposes of debate and to answer questions asked as well as asking a few questions of my own.

There is nothing for me or Property118 to promote!... Read More