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New base for property
G has not been United Kingdom resident or ordinarily resident for a number of years, due to work commitments outside the United Kingdom. He is United Kingdom domiciled.
G is the sole shareholder and director of P Ltd, incorporated and registered in the Caribbean. P Ltd has only existed whilst G has been offshore and P Ltd owns four United Kingdom rental properties. Current value of the properties is £1.2 million and rising. There are no borrowings and P Ltd is registered under the Non-resident Landlord Scheme.
New base for property
G has not been United Kingdom resident or ordinarily resident for a number of years, due to work commitments outside the United Kingdom. He is United Kingdom domiciled.
G is the sole shareholder and director of P Ltd, incorporated and registered in the Caribbean. P Ltd has only existed whilst G has been offshore and P Ltd owns four United Kingdom rental properties. Current value of the properties is £1.2 million and rising. There are no borrowings and P Ltd is registered under the Non-resident Landlord Scheme.
G has certain assignments to complete, but believes he will resume United Kingdom residence and ordinary residence from April 2004. That will cause P Ltd's central management and control to move to the United Kingdom, so that it becomes liable to corporation tax on all income and gains.
After returning, G wishes to retain the property portfolio and personally utilise the income, but with a total base cost of £1 million there is presently £200,000 of accrued gains that arose whilst offshore.
My questions are:
(1) Is there a strategy whereby P Ltd could trigger a market value disposal whilst still outside United Kingdom taxation, such that G could return the the United Kingdom owning the property portfolio (or perhaps with an interest in a trust or a 'newco' that owns the properties), so that for a future sale the capital gains tax base cost would be market value, eliminating the accrued gain of £200,000?
(2) Would stamp duty costs in any such restructuring be disproportionate to the potential tax saving?
(Query T16,164) - DA.
