Here we go round...

I act for a registered children’s nursery which is owned by a divorced lady aged 68. The business consists of the premises owned by her free of mortgage charge and the underlying children’s nursery business.

The main management is carried out by her married daughter who works full time in the business and is employed under PAYE.

My client wants to dispose of a part of the business to her daughter in effect by making her a partner in it. I have explained to her that this would actually involve a disposal for capital gains purposes other than by way of a bargain at arm’s length to a related party.

The market value at the present time of the entire business and building is approximately £500 000. The acquisition cost by the present owner was approximately £170 000 some 15 years ago.

I have explained that she...