Readers’ forum: Tax consequences of transferring land into company

My client is the grandson of an elderly farmer who is a sole trader. Sadly his grandfather (G) is in a state of failing health.

Without taking tax advice the farmer’s solicitor and building development promoter formed a limited company (Newco) for the purpose of the development deal with an anticipated life span of the proposed deal. The Newco set up has my client as a director and 40% shareholder.

The promoter’s reasoning for forming the limited company was that the development does not become caught up in any potential probate administration and the grandson can ‘sign all future documents so that development matters can progress’. The potential development land has been transferred into Newco.

We were approached by the grandson and his parents as they are worried that the grandson will have unseen tax problems from the ‘gift’ of the land into the company. They are...