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My client sold a commercial property he owned to a company in which he is majority shareholder (as part of a bank enforced debt restructure). He sustained a capital loss on this. A condition of the deal was that the property was to be revalued five years after the sale and the company would have to pay my client 50% of any uplift. As there was no way of projecting what uplift if any would arise at the date of the contract, it was returned at the market value at the date of transaction. If there is an uplift and the company pays an additional sum is there a stamp duty liability as the condition wasn’t contained in the original contract but in a “side letter”. If yes does the stamp duty become payable at the date of the second payment or the date of the original contract.
Finally, presumably he should restate the original CGT figures on his income tax return for the year in which the transaction was first recorded.

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Posted by (Questions: 86, Answers: 1)
Asked on 10 January 2019 1:50 pm
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This is a bit of a mess. The stamp duty and the CGT are red herrings.

The stamp duty was paid on the conveyance at the market value and that is the end of the matter.

The client is now trying to extract funds from the company allegedly for the earlier completed sale.

While not doubting your client's bona fides, anyone could do this and try to pay CGT on a profit extraction by referring to the earlier "side letter".

Revenue will likely look at this as a distribution from the company (income tax for the recipient) since the company has already paid full market value for the asset. The company should deduct 20% DWT from the payment.

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Posted by (Questions: 5, Answers: 4797)
Answered on 4 February 2019 7:44 pm