setting up a property company

System
System Posts: 100,537 🤖 Admin 🤖
edited June 9 in General accounting discussion
hi there,

I have had conflicting information about what a property company can put through as expenses. I have been told by someone that materials used to make the property resaleable can not be put through the books. Can so one throw some light onto this subject, as I would have thought through my limited knowledge that this was incorrect, as it is an expenses that the company incur so I can't see why this expenses can not go through the books.If things are different for property companies, can you let me know where to look for further research.

Also, is there any advantage in forming a ltd partnership over a ltd company?

Also from older treads it was mentioned that it was easier to get a straight forward answer from Croners, than from the HMCE . As a member of aat does this entitle me to access the information foc and can you give me the web site?

I hope you can help me.

regards


bel

Comments

  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:setting up a property company

    Your thread title is "......property company" therefore I am assuming that it is a company that buys or builds property, refurbishes property and then sells it on.

    Costs for refurbishing properties in this type of company would be classed as "cost of sales" and therefore allowable.

    If it is the case that the company isn't directly involved in property acquisition and sales - which I doubt from your thread - then it could be classed as a capital gain and the cost of refurbishment etc would be taken into account when calculating the capital gain. I doubt this scenario is applicable - I would imagine the former is more applicable.

    Who told you the costs wouldn't be allowable?

    In terms of LLPs -v- Ltd Cos. can I direct you to an article of mine concerning LLPs? This article gives a comprehensive description of an LLP and the setting up process.

    The link is:

    http://www.accountingtechnician.co.uk/atonline/archive/features/display/store696/item44497/

    In terms of Ltd Co versus LLP it would all depend on what the people setting up the company want. The LLP gives protection for the members against creditors pursuing them personally in the event of a liquidation. Ltd Cos can attract better tax breaks. More often than not a Ltd Co is formed because of reduced taxation but this isn't necessarily the case these days with increased corporate taxes but it isn't to be dismissed entirely.

    I would advise you asking your client what they want and then undertake a tax planning exercise.

    Kind regards
    Steve
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:setting up a property company

    hi steve,

    thanks for the reply. The answer to your question was - The mortgage broker told my friends and they asked me. I'm glad that I was right and that I havent lost all the things i learnt long ago.

    I dont know whether I use the right forum. As I am not in practice, but assume that if you require an answer from someone in practice, then this is where you go.

    I will certainly use your link.



    How do you undertake a tax planning exercise?


    regards

    bel


  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:setting up a property company

    A tax planning exercise is an exercise which is not pre-defined i.e. you don't have a set format as in, say, a corporation tax computation.

    A tax planning exercise is undertaken to assess the impact a given circumstance(s) would have on an individual(s) or businesses' tax position. For example, if an individual was considering incorporation (as in your case above) the accountant would undertake various calculations to identify:

    - whether tax is saved or lost as a result of non-incorporation; or
    - whether tax can be saved on incorporation and if so to what extent.

    A tax planning exercise should be undertaken by someone qualified/experienced in order to ensure the correct calculations are completed and the right advice is given.

    Kind regards
    Steve
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:setting up a property company

    A similar type of tax planning should be done before transferring a client onto flat rate vat. This can sometimes result in a increase in taxable profit which can sometimes lead to the client paying more CT and occasionally being financially worse off.

    Edited:
    The math has worked out occasionally for us, Dean.
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:setting up a property company

    I'm not sure the maths works out on that one farmergiles.

    I am not convinced you would ever pay more CT on a VAT saving than the actual VAT saving itself, let alone 'often'.



Categories

Privacy Policy