New queries, issue 4537

Property developer

Tax consequences on serial liquidation of single purpose vehicle limited companies?

We have a client who develops properties in single purpose vehicle limited companies. His companies do not own the properties concerned. Operating through the companies our client acts as an agent generally masterminding the demolition of old properties and overseeing the redevelopment of the site. In return he receives a share of the overall redevelopment profit. The profit shares can be considerable.

The standard operating procedure here is that once the redevelopment is complete the properties sold and profit share received the company is liquidated with a repayment of capital and entrepreneurs’ relief is claimed on capital gains tax. We understand that there is a limit to the relief that can be claimed.

We would welcome readers’ views or caveats on the above. We have very much oversimplified...