Thank you for your question.
I am not clear why you declared 100% of the profits as sole trader when the property is jointly owned. Profits should have been declared on 50:50 basis.
Transfer of 50% ownership to you close to sale would have bells ringing at HMRC. You should give yourselves atleast 3 months to sell the property after transfer to you. As it happens, you would be in the new tax year then.
Criteria for Entrepreneurs' Relief is both of the following must apply for at least 2 years up to the date you sell your business:
- you’re a sole trader or business partner
- you’ve owned the business for at least 2 years
You appear to qualify on second condition and I have doubts that HMRC would accept first condition unless you are able to demonstrate you had 100% beneficial interest in the property all the time you have traded as holiday let business. More on Entrepreneurs' Relief here
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