off shore company/ shares

[monkey]

I have been offered a company which is an offshore that holds properties in the U.K.Or I can just buy the properties.Can some one please tell me which is the most cost efficent way of saving some money.The whole portfolio value is worth around 800,000k.I can buy it leaseholds or freeholds.or as I said buy the company/shares/
I read somewhere that there would be a lot of diffrence in stamp duty payable if I buy it the right way but I don't know what the right way is.

Thank you in advance.

[Neale]

Bearing in mind the technicalities involved, and potential sums, you are strongly advised to seek professional advice. I suspect that the vendor is trying to take advantage of the difference in stamp duty on shares (0.5%) and higher rate properties (4% I think). The Govt have been seeking to close this perceived loophole, with limited success.

Many considerations apply, for example, once transferred how do you get the property (or more importantly the any subsequent profit on the property) out without triggering additional taxes.

neale@coules.com

[Ian McTernan CTA]

The one thing you need to examine closely is the base cost of the property within the company- just because you pay £800K for the shares doesn't mean the company has this as it's base cost for selling the properties. If it bought them for, say, 200K then there is a potential gain of 600k and tax payable of potentially 180k, meaning you could be paying way too much for the company. This is aside from a whole host of other matters you should consider before entering into such a deal- trying to save a little money now by not employing a professional adviser and a lawyer could come back and bite you!

I can be contacted at:

Ian McTernan CTA
McTernan Associates
50 New Bond Street
London
W1S 1RD

ian@imcternan.com
tel. 020 7629 3119

[Taxbar]

Dear Monkey,

I do not know your status. Are you UK resident and domiciled or not?

If you are then might I add the following to the caveats already set out by the other 2 repsondents.

You will need to hae a professional firm carry out what is called Due Diligence on the Company. This is to check ot owns what it says it owns and has no other libilities. I.e. Debts, tax liabilities here in the UK or elsewhere such as in the offshore location it is registered in.

Lawyers will also be needed to draw up a purchase contract in which the vendor will make certian warranties and offer you indemnities if the Company is not as he says it is.

A Pure clean offshore property company can produce a stamp duty saving, but it will also have the 2 tier tax problem of both the Company and you being liable for tax on any gains if indiidual properties are subsequently sold off. Assuming you keep the properties in the company and sell the company on again as a whole. this will not be a problem.

Daniel Feingold UK&International Tax Law Editor Taxationweb. I can be contacted through my section of this site.

[monkey]

Thanks to all of you for your input.It sounds very scary and I don't want hassles later on,so I'll proberbly buy the properties on its own in my name and will have to bear the stamp duty,which I was told today is at 4%.32k.The company suggested as its a freehold building containing 4 flats and 1 shop,they can split them up on long leases and sell them at various prices
totalling 800k and that way I would save 24k.

Does any one know if this can be done without getting in to trouble?

My long term aim is to leave the properties for my children,who are 13 and 16 and hopefully they will have not have to pay the stamp duty again,as it will be a gift.

Do I need to plan anything now before I buy the properties?(because i already have other property that i rent out in my own name and pay tax.)ie tax,CGT,IHT,FORM A COMPANY OR BUY IN MY NAME/ETC/ETC. I am a uk resident.

If so,is there anyone out there who can guide me and plan it to be the most cost effective way of
doing all this? If so please help by leaving me your contact information for me and i will be in touch in 2 weeks time after the school exams.

Thank you all once again.