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bigduckontax
bigduckontax, Accountant
Category: Tax
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There! My family and I have owned three hotels in the

Customer Question

Hi there!
My family and I have owned three hotels in the past as a Ltd company. Before we brought our third hotel which we currently just own we had made a profit of £400,00 from the sale of the first hotel we owned. At one point we owned the three hotels but this profit of £400,000 has now been spent on renovating the hotel so the profit has gone. We now would like to sell the one hotel which we have left (we paid capital gains on the second hotel we sold) Will we have to pay capital gains tax?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
Limited companies are not subject to Capital Gains Tax (GCT). All such gains or losses are merely passed through the trading accounts of the company and are subject to Corporation Tax at the conclusion of each year. You say you paid CGT on the sale of the second hotel you owned. If it was owned by the company this is the incorrect tax treatment and you should apply to HMRC to restate the accounts and adjust the position.
I do hope that I have shed some light on your position.
Customer: replied 1 year ago.
Thank you very much for your answer. I am asking the question on behalf of my father but I appreciate your prompt response. If I need to ask any further questions how do I go about doing so?
Customer: replied 1 year ago.
Sorry I will explain properly we own the freehold of the property but it is registered as a Limited company would capital gains tax apply in this situation?
Expert:  bigduckontax replied 1 year ago.
Firstly, sorry for the delay; I am diabetic and I was having dinner as I am responding to you from a time zone 7 hours ahead of GMT!
If you and not the company hold the freehold then a personal liability to CGT on disposal would exist. I think I have explained the position viz a viz individuals and limited companies holding and disposing of landed property. For information the gain is the difference between the net selling price ie after deducting selling costs and the acquisition price. The acquisition price is the buying price plus the purchase costs including Stamp Duty or its Scottish equivalent plus any improvements eg installation of central heating, double glazing extensions etc but not routine maintenance which would be set against trading profits.
If you wish to further follow up on this question just continue to talk to me on this thread. You seem to have got the gist of it already anyway!
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3119
Experience: FCCA FCMA CGMA ACIS
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Customer: replied 1 year ago.
Thank you so much for your help. My father is also diabetic so I understand. You've put us in a better picture for when we see our accountant next week.Regards, Clare
Expert:  bigduckontax replied 1 year ago.
Thank you for your excellent support.

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