A complex tax scene; funding; joint ventures; changing legislation and the development of brownfield sites are some of the issues facing the sector.
Our clients are active in all aspects of the property sector including development, management, construction, investment and professional services.
We undertake a wide range of assignments including, tax structuring of acquisitions and disposals in the UK and overseas, claiming capital allowances, floating companies on the recognised London markets, funding acquisitions and VAT issues.
Our Property Group, chaired by Ian Staunton, is a multi-disciplinary group of partners and managers from various areas of the firm co-ordinating and developing our services to clients with property interests.
Our Services
Through a partner-led service we maintain regular contact with our clients and help them to develop financially efficient organisations without losing sight of their organisation’s objectives. Specialist advice and assistance is available in the following areas:
Tax Planning
When developing any business strategy it is essential that the tax implications are considered. The complexities and size of property transactions make this an area of even greater importance, as it is relatively easy for the Inland Revenue and Customs and Excise to make detailed enquiries. We can assist you with planning transactions in the most tax efficient manner so that tax liabilities are minimised and there are no hidden surprises.
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Stamp Duty Land Tax (SDLT) and SDLT Returns
With the reform of stamp duty and the creation of SDLT it is more important than ever to obtain advice on the SDLT implications of transactions. SDLT now applies at rates of up to 4% and the proper structuring of transactions to minimise its impact can result in substantial savings. This could be of even greater significance if further increases are imposed to harmonise with rates applying in other EU countries. Every property transaction requires a SDLT return to be completed, regardless of whether any SDLT is actually payable. We can advise on structures to avoid SDLT or reduce its impact and we can prepare the SDLT returns on your behalf.
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VAT Planning
VAT can have a considerable impact on property transactions and is highly complex. Commercial property may be zero-rated or exempt from VAT and the ability to reclaim VAT can be affected by the decision to opt to tax. We can advise of the implications of waiving the exemption and opting to tax and how it might affect you in the future. We can also assist in maximising the reclaim of VAT costs on property transactions and associated costs.
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Structuring International Transactions
International property transactions can be complex and the correct structuring of these can result in major savings of tax. Non-resident companies holding UK property are usually exempt from UK tax on capital gains and therefore their use can provide significant benefits. Non-domiciled persons also enjoy exemption from capital gains tax in the right circumstances. We can advise you on how international transactions should be structured to produce the most tax efficient solution.
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Limited Liability Partnerships
Limited Liability Partnerships ("LLPs") can provide a tax efficient answer to the question of how to structure a joint venture. LLPs can provide the limited liability of a company whilst retaining the flexibility of a partnership. We have experience of converting existing partnerships into LLPs and also the creation of LLPs to meet specific objectives.
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Joint Ventures
A lot of property transactions are carried out with partners so that each of them contributes land, funds, expertise etc and spreads the risks and rewards of ownership. The choice of vehicle for a joint venture can be difficult as there can be the use of an existing company, the creation of a special purpose vehicle, a partnership, a LLP or a corporate partnership. Each type of joint venture has different tax and accounting implications, which can have a material effect on the results. We have experience of advising clients on the type of joint venture that is most appropriate for the transactions being undertaken and can advise you on the most appropriate and tax efficient solution.
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Maximising Capital Allowances
Various allowances are available on properties depending upon their use and what the property contains. For example, industrial buildings attract allowances of 4% per annum on cost and plant and machinery contained within a building (whether or not it is an industrial building) is entitled to allowances of 25% calculated on the reducing balance. There is scope for making claims for plant and machinery allowances on the acquisition of a property to the extent that claims had not previously been made. Claims for plant and machinery in new buildings can be maximised through liaison with the surveyors as can the repair element of refurbishment projects to give 100% allowances. We have experience of these matters and can advise and assist on the maximisation of tax allowances.
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Non-Resident Landlord Scheme
UK property rented out by a non-resident landlord is taxed by the UK authorities through the tenant withholding tax at 22% and accounting for this to the Revenue. This discharges the tax liability, but does not permit any relief for expenses suffered. If the landlord enters into an agreement with the Inland Revenue under the non-resident landlord scheme, the landlord undertakes to pay UK tax on the UK property income and in return is allowed to deduct from the rental income expenses and interest incurred in connection with the property. This generally is beneficial, but we can advise on the merits in entering into the scheme in particular cases.
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Corporate Finance
Although on the face of it many property transactions may look fairly straight forward our experience has shown that it is essential to consult corporate finance specialists who understand what is involved with buying and selling companies in the property sector. Such advice is required because almost all transactions will involve companies or partnerships that have a historical financial track record. It is essential that appropriate financial due diligence is carried out so that the parties can fully understand the risks and associated financial consequences of the proposed transaction and, if necessary take steps to ensure that they are properly protected. Click here for further information on our Corporate Finance services.
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Raising Finance
When seeking to finance an acquisition nothing can be taken for granted until the funds have been advanced. This level of uncertainty can be costly in terms of time and can make it difficult to move forward with a transaction. One way of managing and reducing the uncertainty is by talking to the right financiers. We have worked closely with an extensive network of banks and equity funders and know which sectors they will lend to and their preferred funding structure. With this experience we are ideally placed to help our clients to negotiate the right financing package for them.
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