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  • Tax

    Hybrid structure: owner, partner and Ltd

    Hi all,

    Following S24 and the talk about incorporation, I listened to a podcast on the 21 Dec 16 from the Property Voice with Richard Brown interviewing Tony Gimple (from lesstaxforlandlords.co.uk).

    http://www.thepropertyvoice.net/property...e15/ 

    Tony favours the option of creating a hybrid structure of partnership, ownership and ltd at the same time. Has anyone used this structure? any thoughts on it?

    thanks and Happy Xmas

    Margarita

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    I believe that Chris Bailey of the Bailey Group is affiliated with this company (a director) and I recently spoke to Chris. From my understanding, you set up an LLP and become a director of it. You also set up and LTD and are also a director of that. The LTD however is also a shareholder in the LLP.

    To be honest I couldn't wrap my head around it and nor could my accountant. My position is that if I can't understand it then I'd probably avoid it. I did ask Chris why all tax advisors weren't recommending this structure and he indicated that he didn't know.

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    Having listened to the podcast however I'd be foolish not to explore it further. I'm in a position where I have raised money for further investing but am flummoxed by the plethora if advice when it comes to structures that mitigate Section 24 impact and IHT.

    Option 1, an LTD. Option 2, an LLP with an LTD. Option 3. A holdings company with multiple SPV LTDs! Perhaps I'm overthinking it. I'd be interested to know what you eventually decide.

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    Announcement:   This discussion will be allowed to continue in the interests of learning but Property Tribes would like it known that we do not endorse this structure/strategy in any way. You are strongly advised to seek independent professional tax advice before getting involved in any complex schemes or structures.

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    I don't endorse any of the above either. To be frank these differing expert opinions are doing my head in. It's easier just to pay the tax due. But yes, speak to an expert to find out what's best for you and if possible get a 2nd opinion - any structure will continue to matter after you die so best get it right!

    It's worthwhile mentioning that PropertyTribes (and others) are partnered with tax advisors rita4rent.co.uk, itself part of a firm of accountants that have been around since 1993. I've not spoken to RITA yet but plan to do so.

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    Hi,

    New member here, but should be contributing a lot hopefully.(Used to work for BTL Lender, but now focusing on my rapidly expanding portfolio)

    My previous job saw me look after nationwide portfolios worth £10-32 million and i remember there was a good split of them in personal and company names. With the new tax structures most of the personal borrowers moved into a limited company structure, although some with sole companies some with management/holding companies depending on their own circumstances.Saying that some big landlords decided to remain unchanged and saw that increasing rents a few % yearly would cover their tax liabilities. I guess as mentioned above this was dependant upon tax advice they were given from KPMG to their local accountants.

     I've listened to the structure proposed and i have seen it work with 2 people who were running a process like this. (One moved all borrowing into a limited company structure when we as a lender found out he was doing the LLP route and enforced action). But it clearly works, and i think its something i am looking at doing to. It would be great if other people have done it or experience of it.  As i have stopped flipping refurbishments and now concentrating on a income producing portfolio i am setting up the correct structure to build on, so i will forward the llp route to my tax advisers Mazars and see their thoughts on it.

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    Would be great if you could share their advice. In particular they should consider section 850C in relation to the treatment of mixed member partnerships and reallocation of profits.

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    Will do. have you looked into this or running this yourself?

    (  tried to message you but im on probation any help on how i can overcome this?)

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    Interested to know if the personal borrowers you dealt with paid large CGT and SDLT bills for transferring into Limited Companies

    It is such costs that prevent most LL from converting into companies

    Am also surprised when you state LL have simply increased their rent to cover the S24 tax bills

    If it was that easy why didn't they increase the rents before S24 was around!?

    Of course if dopey Osborne had allowed a limited timeframe for all personal LL to incorporate without any CGT or SDLT then S24 would have been rendered somewhat ineffective!!

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    Ishy

    I also would be interested in any information you could forward

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    Hi all,

    Just to add to the debate, I have seen another article published by property 118 today. https://www.property118.com/hybrid-tax-structure-for-landlords/93506/

    Anyone has any further info, experience or thoughts on this article?

    Ishy, any information you can share, would be appreciated for all to learn from.

    Happy New Year

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