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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Limited Company trading ten years, two directors have

Resolved Question:

Limited Company trading for over ten years, two directors have equal shareholdings and own the land and building, Company pays Directors £30K per annum for use of property.
Developers (when planning permission is obtained will pay directors (not the Company) for the overall site. No further trading will take place by the company. The premises will be demolished. Capital gains liability will fall on the two directors. Can Entrepreneurs relief be claimed, even as an associated disposal.
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

Please clarify
You say you own the land and building and let the company use facilities for a fee.
What is going to happen to the business once the premises are no longer there?

Many thanks
Customer: replied 2 years ago.

The company will be dissolved

Expert:  taxadvisor.uk replied 2 years ago.
Neil, thank you for your reply.

Please advise -
Did the directors' use rental of the land and building as a business venture (partnership) or how was the fee of £30k reflected on individual tax returns.

Many thanks
Customer: replied 2 years ago.

15000 was shown on tax returns under property income less management expenses

Expert:  taxadvisor.uk replied 2 years ago.
Neil, thank you for your reply.

In my opinion, sale of land and buildings does not constitute sale of relevant business assets for entrepreneurs' relief purposes, I'm afraid.

I would like to refer you to Chapter 2 on page 5 and onwards here

https://www.tax.org.uk/Resources/CIOT/ATT%20and%20CIOT%20Shared%20Resources/Entrepreneurs_%20Relief.pdf


I hope this is helpful and answers your question.

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Customer: replied 2 years ago.

if the sale of companies plant/ machinery stocks and goodwill are sold separately to one of the directors will this alter the position?

Expert:  taxadvisor.uk replied 2 years ago.
Neil, thank you for your reply.

Any gain made from sale of your interest in the business (company's assets) to the other director would qualify for entrepreneurs' relief as you would meet the eligibilty criteria

More information on this can be found here

https://www.gov.uk/entrepreneurs-relief/eligibility


I hope thsi is helpful.
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