How have we helped?

Sale of land for development - VAT charged by promoters

Background: Many sales of land for development by farmers involve a promotion agreement with a third party (the promoter), who will obtain planning permission and market the land to potential developers.

How we have helped: The promoters will receive a fee for their work on the sale of the land as a percentage of proceeds, usually approximately 20%. This fee will have VAT charged on it at 20% which can be a significant amount with land sales for millions of pounds.

However, a sale of land is usually an exempt supply for VAT purposes meaning that VAT on related costs cannot be reclaimed.

We have helped many vendors to structure the VAT position on a sale of land for development, such that this VAT can be reclaimed

How have we helped?

Reorganisation of family farming company

Background: A long standing farming company owned land with possible future development potential. The company also owned rental properties with significant debt attached. The family wanted the son to succeed to the farming business, the rental properties to pass to other members of the family and the development land proceeds to reduce debt and be available for the family’s use. 

How we helped: We worked with the family and the bank to find a tax efficient way of removing the farming trade and assets from the company. This involved setting up a group structure, re-arranging the finance and a distribution to the family through liquidation. The tax implications of the restructure involved corporation tax, capital gains tax, stamp duty land tax and VAT. By discussing and proceeding with the restructure before the potential development land increased significantly in value, the family benefited from a combined lower rate of corporation tax and capital gains tax. The restructure also improved the inheritance tax position in that after two years all the farmland and buildings qualified for business property relief as well as agricultural property relief.