Benefit conundrum

The managing director and major shareholder of a small construction company wishes to acquire from his company as remuneration a piece of land with a house on it. The property was acquired by the company a few years ago (from an unconnected person) for £200 000 and has been rented out (to an unconnected person) whilst awaiting a suitable opportunity for redevelopment. The company has incurred no enhancement expenditure on the property since acquisition but it (the property) is now worth £450 000.

Assuming that the legal paperwork is dealt with correctly I initially assumed that the benefit in kind would be taxable on the director at £200 000 (the expense incurred in connection with the provision of the benefit — ITEPA 2003 s 204) and the company would pay Class 1A National Insurance on this same sum. The company would also seem...