Client Scenario
Pure Tax acted for three co-investors utilising a UK property development structure, who were looking to expand their operations into the UK. One of the clients was UK resident and domiciled in the UK; one was UK resident but non-UK domiciled; and the other was neither resident nor domiciled in the UK, hence identifying a suitable UK real estate structure.
Our Services
As ever, the commercial aspects of the clients’ objectives were paramount. They required funding from a UK bank and the business was to be managed and controlled from new premises in London, so the UK real estate structure needed to be robust and credible.
Given the clients’ very different personal tax profiles, we worked with them to advise on a structure that met all of their individual requirements.
- The means by which the clients provided their own funding to the business, and in particular the tax implications of extracting these funds in the future. The non-UK resident individual would have suffered a 20% “withholding tax” on interest payments made to him, which guided our commercial suggestions to avoid that.
- The respective benefits and drawbacks of incorporating the business either in the UK or offshore, where it was important to balance the tax position of the non-domiciled individuals against the potential tax implications for the UK resident client.
- Liaising with the clients’ lawyers to ensure our proposed UK real estate structure was appropriate from a legal perspective, and vice versa.
- Consider longer-term structuring opportunities based on two of the clients’ expressed wishes, to use some of their returns to make provisions for their families.
Outcome
The taxation of a UK real estate structure has undergone significant reforms in recent years, and keeping abreast of the latest developments remains vital. A large proportion of our clients have substantial property interests across a range of sectors, both residential and commercial, and it is necessary to always bear the changing tax landscape in mind for a newer UK property development structure.
The team at Pure Tax has a wealth of experience advising individuals and businesses on property acquisition, development, holding and disposal, both in the UK and overseas. Whether a bespoke residential project or a multi-billion pound commercial complex, we pride ourselves on providing the highest level of service across the board.
Please note: this case study reflects the facts, circumstances and tax position at the time the project was undertaken. It has not been updated for any subsequent change in tax law or practice and must not be construed as advice, or otherwise relied upon for any purpose.
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