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  • Tax

    Restricting tax using LLP+Ltd company?

    I would ask Tony Gimple  how easy it is to get mortgages for the hybrid.

    Given that the hybrid structure has been used by The Bailey Group for 10 year's you would think by now that HMRC would have challenged it as they have had more than enough time

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    Hi All,


    One of the best discussions for a while; albeit difficult to answer fully without breaching Property Tribes guidelines, giving away too much of our IP, or providing answers out of context without first knowing an individual’s circumstances.  The hardest part I guess though, is how does the layman know whose solution passes muster.


    Sadly we do not have a unified tax system nor a clean sheet of paper from where to start again; and, as with all fast moving and often politically based systems, understanding,  practice, and acceptance, evolve through a combination of employing existing proven strategies, mixed partnerships say, through to at the other of the spectrum those that rely upon untested opinion or aggressive implementation.  And, from time to time, very wealthy individuals like the Duke of Westminster successfully put HMRC to the test, resulting in a new understanding, practice, and acceptance.


    Getting anything like objective opinion from commercial and property tax professionals is likewise fraught with difficulty for the layman.  There are only a handful of firms out there who have both the raw knowledge and the benefit of sufficient successful and contextual experience, able to pass meaningful comment, but they are in effect competitors making it even tougher for you to decide.


    S24 is a timebomb whose widespread unpleasant and costly effects are already being felt.  Open access forums will only ever give you so much information, and eventually you’ll have to make a decision or risk going under simply by dint of inaction or analysis paralysis.


    The only thing you can do is to ask the protagonists to advise you after first providing them with identical information, checking to see what their track record with HMRC is, perhaps speaking with some of their longer term clients at the right moment, and, most importantly of all, getting sight of their professional indemnity cover which, by the way, should always be per case/matter, and not in aggregate. You shouldn’t be asked to sign any form of non-disclosure agreement, but you should be prepared to pay for the advisers’ time.

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    Tony Gimple

    Founding Director

    Less Tax For Landlords


    THE HARDEST PART I GUESS THOUGH IS HOW DOES THE LAYMAN KNOW WHOSE SOLUTION PASSES MUSTER

    S162 Incorporation i understand and for those that are confident they qualify and take this route once its done its done

    Your new company would be able to change accountants any time they choose after  incorporating whether or not the new accountants approve of S162 for BTL

    HYBRID as a layman  i do not understand as its to complex for me

    I guess that going forward you would have to remain tied to the firm of accountants that devised the arrangement .If that firm ceased to exist for any reason in the future will any new accountants understand and be willing to work with this hybrid set up ?

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    https://www.ansteeco.co.uk/limited-compa...portfolio/

    Interesting article that talks about the hybrid structure and financing

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    Hi Bill,

    One of the nicest things about hybrids, is that all the existing mortgages and any new ones are in the individuals personal names and not that of either the LLP or Limited Company.

    To date, we've never had a mortgage lender refuse to lend because of the structure.  What we are seeing however, are lenders paying much more attention to business plans and tax positions, as both can negatively impact ability to borrow.

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    Tony Gimple

    Founding Director

    Less Tax For Landlords


    Hi Don, hybrids are simpler than they appear to be; the more complex bit is whether you need to take any action at all.  Meanwhile ...

    If you own up to three properties rental properties, are a basic rate taxpayer, and either intend to dispose of them in the short to medium term, or not to grow any bigger, then it is probably better to stay as you are.

    If, however, you’re already a portfolio landlord (four or more rental properties), are a higher rate taxpayer, or by 2020 the changes will make you one, then the hybrid route is almost certainly the right way to go.

    The same applies if you’re serious about expanding your property business and have the means with which to do it.

    Whatever you do though, DON’T LET THE TAX TAIL WAG THE PLANNING DOG!

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    Tony Gimple

    Founding Director

    Less Tax For Landlords