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Property118 and Cotswold Barristers proudly offer fixed fee quotes and absolute transparency in charging structures, so that you know exactly what your costs will be before you decide to instruct us.
That said, it is impossible for us to provide a fee quote before we fully understand your current circumstances and your objectives. This is because professional advice can never be reliable unless it is based on facts. For this reason, the process always begins with a consultation.
Consultation fee
This is priced at £400 + VAT and includes as much correspondence by email, telephone, or Zoom meetings as necessary for us to understand your objectives and to recommend the optimal business structure(s) to meet those objectives. We actively encourage our clients to involve their existing trusted professional advisers in the consultation process. If we feel we are unable to assist or you decide at any point not to proceed with the consultation process we guarantee a no-quibble full refund policy.
Please note that it is very common for the implementation of structures we present to include a combination of the following. However, this is by no means an exhaustive list of the services we provide and is provided purely for guidance.
Project Management Fees “PMF”
These fees are only ever quoted when a client has been through the entire Property118 consultation process, culminating in a recorded video conference, which their existing trusted advisers are encouraged to attend. They are only ever invoiced if a decision to proceed with the recommendations presented has been agreed by all parties.
Once the PMF has been paid Property118 will produce a detailed written Report and Recommendations with supporting links to all relevant legislation and HMRC manuals, prepare the Barrister’s Brief, and deal with Anti-Money-Laundering compliance checks. This work will then be independently reviewed by Cotswold Barristers, and if they agree to adopt the Property118 recommendations as their own professional advice the PMF will be regarded as earned. If not it will be refunded in full. The level of this fee depends on the complexity of the case, which is scored on a scale of one to 10. For example, a complexity level three case would be charged £3,000 + VAT whereas a complexity level nine case would be charged £9,000 + VAT. The Property118 Consultant working on your case will decide the level of complexity.
Substantial Incorporation Structure
This is a legal process used to transfer a rental property business from private ownership into a Limited Company without the need for refinancing. The transfer occurs at market value, which is funded by exchanging equity for share premium and an indemnity for debt. The legal work is priced at £8,000 + VAT for up to 10 properties and a further £350 + VAT for each additional property. The legal work entails drafting a Business Sale and Purchase Agreement (including the indemnity), exchange of contracts, checking mortgage lender T&C’s and obtaining their permission to implement where necessary, Agency Agreement to enable the previous owners to service indemnified liabilities until they are discharged by the company as well as drafting and filing the appropriate updates to Companies House records for compliance purposes.
Capital Account Restructuring
Where business liabilities are less than the acquisition costs of the business assets it makes sense to increase the business liabilities to finance the extraction of ‘owner’s capital’ prior to incorporation. This is because capital can be extracted from the business tax-free prior to incorporation. Failing to extract such capital from the business would result in that capital being rolled into shares at incorporation, which would make it impossible to access post-incorporation without taxation consequences. Any form of legitimate financing is acceptable, including mortgages. However, where the cash is not immediately required it can often make sense to borrow short-term using an overdraft facility or bridging finance. The increased liability is then caught by the indemnity at the point of incorporation. Post incorporation, the owners can loan the cash back to their company in the form of a Directors Loan, which can be repaid by the company without personal tax consequences to the owners whenever the company has cash resources to do so. Meanwhile, the company can use the cash loaned to it by its Directors to redeem the short-term finance it indemnified at incorporation. Property118 charges a fee of 1% of any short-term funding arranged. We are happy to work with any lender our clients choose to appoint, or to recommend them to a lender we have an exclusive arrangement with for this type of financing. There are no legal or valuation fees and no charges taken against properties if a client choses to work with our recommended lender, which charges £750 for account administration and a further 1% for their short-term lending. *Please note that capital and equity can be two very different things. If you are unclear about the difference please visit this page and/or this page and/or this page and/or this page.
‘SmartCo’ Family Investment Company
This is by far the most popular structure we recommend.
To understand the benefits of this Limited Company structure vs an ‘off-the-shelf’ company that can be formed online for as little as £12.99 please see this link.
The fixed cost legal fees associated with implementing a typical SmartCo structure for a married couple are £12,605 + VAT. This includes company formation or restructuring an existing company to include multiple classes of shares with different rights, drafting and filing of bespoke Articles of Association, drafting of a bespoke shareholders agreement, a pair of Mirror Wills, a pair of Lasting Powers of Attorney for each of the two founders of the business, a Discretionary Trust and Letter of Wishes to trustees.
Limited Liability Partnerships
Forming an LLP is relatively straightforward, but drafting a Members Agreement to provide maximum flexibility for profit allocation without triggering CGT or SDLT is not. The legal fees for this work are £4,995 + VAT for a two Member LLP and a further £1,000 + VAT for each additional Member.
