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My client has traded for ten years as a sole proprietor from commercial premises the freehold of which he owns.
He has been approached by a property developer who is confident of obtaining planning permission for housing on the site and has suggested a joint venture whereby the proceeds after the costs of the development are apportioned 75% to my client and 25% to the developer.
My concern is that by deducting the original cost of the freehold £200 000 from his 75% share of the profit (budgeted to be £750 000) the surplus will be taxed as income attracting higher rates and will lose the entrepreneurs’ relief that would be available by a simple capital disposal.
How would Taxation readers structure the deal for tax purposes?
Query 17 425 – Costly
Reply from David Young BKL Tax
The client has traded from the premises for...
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