Author Archives: Cetin Suleyman - Managing Partner

About Cetin Suleyman - Managing Partner

T +44 (0)20 7874 8833

Cetin’s focus in on helping his clients improve their businesses and the decisions they make.

With an entrepreneurial family background and a first-hand understanding of what the "bottom line" means in a family business, Cetin brings this understanding into every task. As a result clients value his commercial and practical solutions, both for long and short term business and tax planning.

Most of Cetin’s clients are owner managers of small and medium sized businesses facing similar issues and the past 15 years have focused on the construction and property sector, although he still retains a strong interest in other industry sectors.

Changes to VAT in the construction industry have been delayed from 1 October 2019 to 1 October 2020.

The date on which the new rules were to  come into effect was fast approaching but the original deadline of 1 October, being 30 days before the UK was due to leave the EU, has been extended by 12 months.

Putting aside the distraction that construction businesses have gone through to get ready for these changes, the delay has to be  welcome, considering everything else they need to contend with in the coming months.

So with further time to plan, here’s a reminder of the main points:

What does the domestic reverse charge do?

  • Effectively, it puts the responsibility for paying VAT over to HMRC on the customer.
  • Until the change, that responsibility is with the supplier who raises the invoice and adds VAT to it.
  • Going forward both customer and supplier must make certain entries on their VAT returns to record what’s happening.

What is the effect on cash-flow?

  • There will be winners and losers.
  • Businesses affected will no longer receive the “gross” invoice value from their customers.
  • Similarly, they will no longer pay the “gross” invoice value to their suppliers.
  • In essence, any cash flow benefit that a business has under the current rules is eliminated under the reverse charge. This could cause issues for some.
  • Example:
    • Assume a construction service with a value of £1m.
    • Presently the sub-contractor would charge their customer £1.2m (£1m plus VAT).
    • That sub-contractor would account for the £200k to HMRC.
    • Depending on payment terms and commercial agreement it is possible that some sub-contractors would receive the £200k VAT before having to pay it to HMRC.
    • Others however, would need to finance the £200k because their VAT payment date falls before they receive payment of their invoice.
    • Applying a reverse charge would have a negative cash flow impact on the former whilst a positive impact on the latter.
  • We strongly recommend therefore that businesses fully get to grips with the cash-flow implications and model the cash-flow impact on them well ahead of the new implementation date of 1 October 2020.

Of course, the above applies only where businesses are affected by the reverse charge, so here are some pointers to assist in understanding more about it.

Where does the domestic reverse charge apply?

It doesn’t apply in all situations. For example:

  • It usually won’t apply when the customer is an end-user eg, a property owner or property developer. In this case, the contractor must charge VAT on their invoice in the traditional way.
  • It will apply when a sub-contractor provides construction services to a contractor, who then re-charges those services on up the chain. I’ll call these “mid-stream” contractors for this article.

What does the domestic reverse charge apply to?

  • Specific activities, broadly in line with the Construction Services definitions in the Construction Industry Scheme (“CIS”) rules; broadly anything building, altering, repairing or demolishing buildings or land.
  • If there’s any element of construction involved in a supply, the reverse charge applies to the whole supply.
  • The reverse charge does not apply to zero rated supplies.
  • So, the first challenge is for any contracting business to go through its contracts and decide which of them make its customers “end users”, and which of them will need the “reverse charge”.

Considerations for suppliers of construction services

What if my customer is an end-user?

  • If you supply to an end-user, eg, a property developer, or a property owner, then you must charge VAT on your invoices in the traditional way.
  • The customer must pay the gross invoice value (including VAT) to you.
  • You must pay the VAT over to HMRC on its normal VAT return dates.
  • In some cases, whether the customer is an end user or not is not obvious, for example, in a property development group there may be one company that engages all sub-contractors for the individual companies (Special Purpose Vehicles) across the group.
  • It’s advisable therefore to confirm with the customer ahead of raising any invoices, that they are an end-user and HMRC suggest they provide you with the following wording:

“We are an end user for the purposes of section 55A VAT Act 1994 reverse charge for building and construction services. Please issue us with a normal VAT invoice, with VAT charged at the appropriate rate. We will not account for the reverse charge.”

What if our customer is a mid-stream contractor?

  • Where the customer is part of the construction chain and they do not have an interest in the land or buildings on which the work is being carried out, then the domestic reverse charge is likely to apply.
  • You, as the supplier, raise the invoice showing the net amount.  You should show the VAT amount, but must not charge it as VAT. This is a very subtle point.
  • All other aspects of the invoice remain as before, eg, VAT number, description, numbering etc.
  • The invoice should state that the reverse charge is being operated. HMRC suggests:

“Reverse charge: S55A VATA 94 applies. Customer to pay the VAT to HMRC.”

  • You, as supplier, are paid the invoice value ie, the net of VAT amount.
  • You enter the net amount of the invoice on its VAT return.
  • You make no payment of VAT to HMRC for that invoice.

Considerations for recipients of construction services

What if I am an end user?

  • The end-user will generally have an interest in the land or buildings being worked on.
  • Expect to provide confirmation to suppliers of that fact (see above)
  • Generally nothing will change for end-users.
  • You’ll receive invoices with VAT added as before
  • The usual checks and VAT reclaim processes will apply as before.

What if am a contractor receiving and making onward supplies of construction services?

  • Invoices received for qualifying work should state that the reverse charge applies.
  • The invoice will be for the total amount, but the “VAT” element will not be charged as VAT. Again, a very subtle distinction.
  • The invoice must in all other respects be a valid VAT invoice, eg, VAT number etc.
  • You, as the customer, must enter an amount equivalent to the VAT that is due in the Output Tax box of your VAT return.
  • It’s important that the correct VAT rate is used.
  • Where the VAT is recoverable, then the amount of recoverable VAT should be entered as Input VAT, and the net amount included as Net Inputs (Box 7).

What other complexities are there?

Even though HMRC have said they will approach things with a light tough in the first 6 months, there is lots to consider:

  • Software systems need to be able to cope with putting just the output VAT in Box 1 with no Net Outputs in Box 6.
  • Self-billing and authenticated receipt procedures need careful consideration.
  • The onus is on the customer to apply the correct rate of VAT (eg, standard / reduced rate / zero rate).
  • The nature of the supplies need to be decided as being in or out of this scheme. Mixed supplies of construction services and other services need to be looked at more carefully.
  • VAT cash accounting can throw up issues.
  • Certain types of work have specific rules.
  • The interaction with the Construction Industry Scheme can add an extra element of confusion.


It’s all somewhat ironic of course – given that the VAT Reverse Charge has until now mostly been used for sales and purchases between EU member states.

Nevertheless, given that I believe the key impact to be possibly one of cash-flow, rather than tweaks to accounting systems and administrative processes, the extension can help businesses have a bit more certainty on their own cash positions; and of course we all hope, there will be a less unpredictable political and economic environment in which to adjust, once these rules come into force.

We can assist in both the technical and administrative aspects of understanding and applying the new rules, and also the practical, commercial implications of modelling the cash impact on your business. Regrettably we can’t do much to help with the economic or political situations!

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Goodman Jones is delighted to announce that Paul Bailey has joined the firm as a partner, as of 1st May.

Paul advises businesses looking to grow, either organically or through acquisition and then works to optimise the position for owners at the eventual point of exit. He has worked on a varied portfolio of organisations that includes listed companies and international groups, as well as owner-managed companies.

Over his career, Paul has developed a deep expertise in property and construction. He advises growing clients in that sector, not just on technical matters but by ensuring that the business owners receive the advice they need to help to fulfil their long term aims and objectives.

Cetin Suleyman, Managing Partner said, “We are delighted to welcome Paul into the firm as a partner and are particularly excited about the experience he brings to further invest in and develop our Property & Construction expertise.”

Paul said, “I am really looking forward to joining the Goodman Jones team and adding my real estate and construction expertise to assist, advise and support the firm’s clients. I am also very excited about exploring new ways to further enhance how we look after Goodman Jones clients and attract new clients to this very dynamic firm.’’

Cetin concluded, “Over and above his technical expertise, Paul’s overriding desire is to be a trusted adviser to his clients, helping them to achieve their objectives and ambitions. This is the hallmark of a Goodman Jones Partner.”

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Paul Paling of Michelmores, John Redwood of Charles Stanley with Cetin Suleyman, Goodman Jones

Uncertain times have an impact on investor confidence. With Brexit on the horizon, Goodman Jones, Michelmores, and Charles Stanley hosted a debate on what the UK commercial and domestic property market might look like over the next year.

A group of 75 owners and senior individuals within the property sector met in Michelmores’ London office to discuss whether UK commercial property is undervalued and what the future holds for the property market.

The audience responded to several interactive questions to take the pulse on the challenges and opportunities facing UK real estate.


A third of the audience felt that affordability was the key factor likely to affect UK house prices over the next twelve months. This was followed closely by interest rates, then SDLT and tax changes, with foreign investment, at 10%, being the least likely to have an effect on prices.

Tenant Demand

An overwhelming 58% of the audience believed that tenant demand will be the main factor affecting UK commercial (non-retail) property prices over the next 12 months. Foreign investment came next with 22%, followed by 14% who felt that a change in taxation will have an impact, with only 8% of the audience viewing interest rates as a factor.

House Prices

When asked the question “Do you expect the gap in house prices between London and the South East and the rest of the country to increase over the next 5 years?”, almost 70% of the audience considered this to be either unlikely or very unlikely. A minority of 10% felt it was very likely, with 22% deeming it a possibility.

Residential best for investment

Residential was the sector that 42% of the participants felt was the best to invest in now, followed by industrial/other at 35%. Offices and retail came bottom of the poll, with 15% and 8% respectively of the audience thinking these sectors presented a valid opportunity.

John Redwood, Chief Global Strategist at Charles Stanley, then delivered a presentation which covered a global statistical overview; the general economic outlook and the main risks to the UK market. These included the impact of a US interest rate rise and whether the UK would have to follow; the tariff and trade war; the Middle Eastern crisis and Russian involvement in the balance of power; a new phase to Euro area banking and deficits troubles; a potential Chinese slowdown; and finally, the impact of President Trump on the global stage.

In relation to the UK commercial property market, Mr Redwood highlighted the trophy purchases of several iconic London landmarks. He saw these as demonstrating a trend towards falling in line with book valuations, as opposed to the situation two years ago when the Cheesegrater (122 Leadenhall) sold for 25% above book valuation. However, as the recent purchases of a combined total of over 3 million square feet of office space by Apple, Facebook, Google and Bloomberg demonstrates, the technology, media and telecoms sector is currently spearheading demand for London space.

Will this level of demand continue? Mr Redwood discussed the negative and positive influences that could affect the UK property market, and put forward three scenarios outlining: Best Case (Stronger Growth); Worst Case (New Crisis); and Base Case (Muddling Through). With a 65% probability for the Base Case the message for the audience was that, while uncertain times lie ahead, things could be considerably worse, and a patient and pragmatic approach may be the best way to weather the storm.

Paul Paling, Head of London Michelmores, commented; “The evening stimulated keen debate, and as John Redwood highlighted there are headwinds to be reckoned with, however the outlook is not doom and gloom. We believe that the UK property market will continue to be resilient and an attractive investment prospect.”

Cetin Suleyman, Managing Partner, Goodman Jones concluded, “It was fascinating to hear the views of the room which included property developers and construction business owners. John Redwood’s observation was that digital transformation will have a significantly greater impact on business success than a short-term economic impact of the Brexit deal. As ever, uncertainty brings opportunity for entrepreneurs and businesses willing to invest in evolving to line with future market expectations.”

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Esther Wood has joined Goodman Jones.

Cetin Suleyman, Managing Partner, said “We are always looking for good people who reflect our values of building long term relationships with clients by giving proactive, commercial and sustainable advice. Esther has a fantastic breadth of commercial experience having not only advised many owner-managed businesses, but seeing the client’s side by carrying out interim FD roles for several companies. Thus, in addition to her audit and accounting background , her experience and empathetic approach are particularly relevant to our clients who value the practical and commercial advice we provide.”

Esther Wood said, “I have worked on a broad portfolio of businesses including property but I am particularly interested in the Leisure & Hospitality sector and so as well as adding to the strength of Goodman Jones across the board, I am looking forward to adding to the expertise Goodman Jones can provide in that sector.”

Cetin Suleyman added “As a firm that puts people before the numbers, the quality of our people and how we work seamlessly together is what sets us apart. Having seen Esther interact with many in the Goodman Jones team already, I am delighted to welcome Esther and I am confident she will quickly have a positive impact for clients and Goodman Jones as a whole.”

Esther concluded, “I am really excited to be joining Goodman Jones and working with the team to help our clients’ businesses thrive in today’s dynamic business world.”

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Goodman Jones has announced that Martin Bailey has been elected to partner.

Cetin Suleyman, Managing Partner said “We are delighted to have promoted Martin to the position of partner.  Since joining Goodman Jones in 2012, he has demonstrated what an asset he is to the firm and his election to partner is part of a strategy to blend the very best of our home-grown talent with high-calibre externally trained partners.  All of this is focused on delivering the best client service possible.”

“Not only does Martin have many years’ experience in dealing with commercial and trading businesses across a range of sectors, but he has played a big part of the growth and success of the firm’s Charity and Social Business Group sector group.  Combining the two is no mean feat, and the fact that Martin has successfully done so underlines what a top performer he is.”

Martin said, “I am delighted to be elected to partner at Goodman Jones and am very excited to be taking on this new role.  Becoming a partner allows me to further promote a sector which has always been very close to my heart, but at the same time allows me to further develop the relationships I have formed with my clients who run substantial trading businesses.  I look forward to working alongside my fellow partners in continuing to provide the highest quality, partner-led service to all of our clients.”

Cetin concluded, “Over and above his technical expertise, Martin really looks after clients and has won considerable praise for his approach. He doesn’t just look to give them the answers but actively seeks to help them work smarter and become more self-sufficient. It is an approach that we value highly at Goodman Jones and I am delighted that he is now a partner of the firm.”


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Acquiring commercial sites to convert to residential use is proving an increasingly popular strategy among property developers.

There seem to be several factors driving this trend. These include good availability of vacant commercial sites, and a growing demand for residential space. In addition, commercial locations can carry permitted development rights, which ease planning restrictions for developers.

A word of warning, though: turning a commercial development over to residential use is a VAT minefield.

It’s very different to developing bare land, for example, or redeveloping an existing residential site. These arrangements rarely expose developers to the most intricate aspects of VAT.

Converting commercial to residential, however, does have some extremely complex VAT implications. It’s easy to get caught out, and the cost of doing so will hit development profits.

Let’s take a look at some of the pitfalls. And I stress ‘some’ – the list below isn’t exhaustive.

Pitfall 1: Election to waive exemption

Developers will know that commercial property begins life exempt from VAT. But owners may have waived that exemption (sometimes known as “opting to tax”) at some point during their ownership of the property.

If the vendor has taken this option on the site you’re acquiring, then 20% VAT will be added to your purchase price.

Before finalising contracts, therefore – and preferably before agreeing Heads of Terms – you need to check whether the owner has elected to waive the VAT exemption. Otherwise, you could end up with a large, unexpected VAT bill.

Pitfall 2: Reclaiming VAT

You’re probably thinking that the obvious solution to the above scenario is simply to reclaim the VAT.

In most cases, you’d be right. Though bear in mind that it takes several months, which will impact cash-flow.

But to reclaim VAT, you will of course need to be VAT registered. And that’s where the delay lies. Developers often use Special-Purpose Vehicles (SPVs) to purchase sites, which are rarely VAT-registered.

You can apply to HMRC to register an SPV for VAT, but it’s not a user-friendly process. Many applications are delayed or rejected because the case isn’t presented properly. You’ll need technical advice to help present your case, and to ensure your application is approved with minimum delay.

Also, care must be taken over the date on which you register for VAT to ensure you maximise your VAT recovery.

Pitfall 3: The SDLT premium

Stamp duty land tax (SDLT), currently set at rates of up to 5%, is charged on the gross purchase price of property. So if your vendor has elected to waive VAT exemption on the site you’re buying, this will increase your SDLT liability – whether or not you subsequently reclaim the VAT.

Pitfall 4: TOGC

There will be further complexities if the site you’re acquiring isn’t completely vacant.

Taking over tenants in a building that is already let means your purchase may come under the Transfer of Going Concern (TOGC) rules, which will have VAT implications.

The key word here is ‘may’. Whether your transaction constitutes a TOGC or not depends on several factors: the terms of the sale contract, the commercial relationships and terms of the rental contracts between the vendor and the tenants, and a host of requirements to be VAT registered and opting to tax.

TOGC sales are ignored for VAT purposes, which is obviously beneficial for developers buying sites, as it avoids pitfalls 2 and 3. But vendors may not deal with this as strictly required, and could end up charging VAT.

What’s more, any VAT paid on a TOGC in error is NOT refundable by HMRC.

Pitfall 5: Mixed use

Converting a commercial site to wholly residential use is one thing, but developing it for mixed use creates yet more complexity.

Commercial units are treated differently for VAT purposes than residential ones, which affects the VAT you can recover on any expenditure, and the amount to charge on an eventual sale. What’s more, the VAT status of the commercial space will differ depending on whether it’s sold freehold or as a long lease.

So whether you acquire a commercial site that is VAT-exempt or opted to tax, you need to consider your own strategy for waiving VAT exemption. Your decision will depend on your proposals for the site, and on the need to avoid a troublesome VAT position – for yourself and for potential buyers.

The right solution

There’s never a black-and-white solution to these scenarios. In each case, the right approach will depend on the nature of your business, the details of the site you’re acquiring, and your plans for its development.

Demand for commercial sites is high, and you’ll need to move fast to snap them up. But you must take time to consult a technical expert on the VAT implications first. Somebody who not only understands the rules, but can interpret what they mean for your business.



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The dark ages of company car taxation

Back in 2001, the system for taxing directors and employees for the private use of company cars was based simply upon the list price of the car multiplied by a percentage based upon business miles driven. It seems inconceivable now that the employee would pay less tax, the more they drove and hence polluted!

A new system introduced – the polluters pay

The replacement system is still in operation, and is based upon the list price of the car and a percentage based on its approved CO2 emissions. Over the past 15 years this new policy has had the effect of driving-down the attractiveness of gas guzzlers and high value luxury cars as company cars, in line with EU wide objectives, but the motor industry has responded with creating increasingly efficient car engines, and allegedly in some cases “clever” software that creates the illusion of such!

Ultra-Low Emission vehicles to the fore

Scandals aside, it’s fair to say that the motoring industry has responded positively andParis, France - September 29, 2016: 2017 Porsche Panamera 4 e-hybrid presented on the Paris Motor Show in the Porte de Versailles many manufacturers now offer Ultra-Low Emission electric or hybrid vehicles (“ULEVs”). For many years this was the domain of the Toyota Prius’ and the G-Wiz’s of this world but with Porsche having just released their Panamera e-Hybrid which boasts a CO2 emissions figure of 56g/km, 0-62mph acceleration of 4.6 seconds and a top speed of 172mph, the game has changed.

Tax breaks a plenty

So why is there such excitement about ULEVs and why is an accountant writing about it? Well firstly, compared to a traditional engine vehicle, there is a saving in the amount of Income Tax paid by directors and employees for whom such vehicles are made available for private use. This in addition leads to reduced Employer’s National Insurance for the company, not to mention reduced running costs that come from lower road tax/vehicle excise duties.

100% write off for Corporation Tax?

But the thing that might really put a £90,000 Porsche (or something similar) on a company director’s horizon is the fact that the company can potentially claim 100% of the purchase price against its Corporation Tax liability in the year of acquisition. That really is a tremendous saving, although there are a few caveats and a limited window in which one can take advantage of this.

A limited window of opportunity

The CO2 emissions threshold at which these tax breaks are available is continually being lowered and the Government have already announced the proposed percentages for the calculation of benefit-in-kind charges until 2019/20. For the £90k Porsche for example, the percentage rate of 11% of list price in 2016/17 will increase to 19% of list price in 2019/20. This means that the additional notional salary on which the driver will be taxed increases from £9,900 now to £17,100 in 2019/20. In addition, were the purchase to take place after 5 April 2018, the 100% first year allowance would not be available because the emissions threshold is being reduced to 50g/km from that point on.

So at some point in the future (and based on the legislation as it stands now) one would have to again consider private ownership as opposed to company ownership of these very same cars – or maybe switch to a fully electric vehicle (Tesla or BMW i8 anybody?)

A sting in the tail?

In some cases the company could see a Corporation Tax charge arising on the proceeds, when the vehicle is sold. This very much depends on individual circumstances and even though the tax charge could well be at a lower tax rate than the initial tax saving the reader is urged to take professional advice on this whole subject before rushing off to the showroom.

And finally the prudent accountant in me would counsel that the commercial dog should never wag the tax tail – but for many, the combination of a prestigious new car and significantly reduced tax liabilities will be difficult to resist!

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CEO and Founder, Jodie Abrahams began FR Events in 2007 to create a fundraising model which would consistently deliver, changing the face of fundraising worldwide.

The most important factor is that there is no financial liability to the charity or organisation running the event. This is because FR Events believe that 100% of money raised should go directly to the charity.

Since its foundation, their distinctive approach has successfully raised over £30 million for charities worldwide, achieving real results for real people and real causes.

Jodie said, “We have worked with Goodman Jones for many years now and have always found them incredibly efficient and amenable. They understand our core values and go above and beyond to make themselves approachable, and are always there with relevant and supportive advice both in general commercial matters and also covering specific tax and VAT queries that come up with an expanding international business. Reliability is essential and Goodman Jones have consistently proven themselves throughout our working relationship.

Read the full story about FR Events in our Client Profiles or see our UK Businesses and Entrepreneurs section.

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Cetin Suleyman, Managing Partner said, “I am delighted to make the following announcements, which are driven by the sole purpose of enhancing the service we provide to our clients.

“By adding value through our tax consultancy and business advisory services, we’re underlining our firm’s ethos and commitment to being more than just chartered accountants.”

Partner Promotion

Janet Pilborough-Skinner has been promoted to Partner from 1 June 2016.

Janet joined the firm in July 2015 and specialises in tax planning for high net worth clients.

Graeme Blair, head of the tax team at the firm said, “Janet has enhanced what we do for our high net worth private clients in terms of inheritance tax planning and wealth preservation.   Since her arrival, she has been working with our entrepreneurial and family business clients on their affairs covering issues such as succession.”

“As well as working with our UK based private clients, she has been busy advising internationally mobile clients. Her expertise on offshore personal taxation planning is highly relevant to those who come to us looking to establish a business in the UK.  Recent work has included advising on offshore structures, domicile and residence planning and trusts.  She is a great addition to the tax team and the wider firm.  I am delighted to see her attain this promotion.”

Janet said, “The firm has a dynamic edge which has proven a real boon in winning and delighting clients.  I relish the challenge of being part of the partnership team to take this forward.”

Senior Partner

Larry Phillips will become the firm’s Senior Partner from 1 June 2016 and will be leading two key, long-term initiatives that have been identified as being in demand from the firm’s clients and wider business community.

Business Performance Improvement

Larry said, “I love being able to help our clients genuinely improve their businesses and nothing gives me more pleasure than being able to help people realise their potential,  so I am really looking forward to leading our business performance improvement initiative.

Family businesses

Larry continued, “We have always worked with family businesses but we haven’t always been good at talking about that expertise.  I will be leading an initiative, along with Janet Pilborough-Skinner, to promote that expertise.”

Managing Partner

Cetin Suleyman has been elected to Managing Partner from 1 June 2016.

“Thanks to Larry’s leadership over the last fifteen years and the cohesion and commitment of the partners and staff, the firm is in fantastic shape.  I am naturally looking forward to guiding the firm in the next stage of our development in this ever-changing world of business,”said Cetin.





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New rules are about to come into effect that effectively remove the tax advantages that non-UK based property developers enjoyed when developing UK property.

New legislation

Hidden away in this March’s Budget announcements was a detailed paper produced by the Government to highlight its concerns that some property developers use offshore structures to avoid UK tax “Profits from Trading in and Developing UK Land“.

Levelling the playing field

The paper describes in detail, the way in which offshore developers use these structures and how it is perceived to give them an unfair advantage over UK developers, who are liable to UK tax on their trading profits from developing property in the UK.

HMRC have for many years been challenging such structures, but the Government have proposed changes to UK tax legislation so that all profits arising from UK property development will be taxed in the UK. The new laws will take effect with the 2016 Finance Bill, but anti-avoidance rules are already in force to catch existing structures being unwound.

HMRC Task Force

As well as changes to tax legislation, a new task force is being created to identify and pursue offshore entities that do not toe the line with the new legislation.  There are rumours that some 100 structures are already under scrutiny.

Bad news for UK property developers based overseas

Clearly, those developers that operate in this way will be looking at their tax affairs and considering the additional cost that these changes will bring on them.  They’ll have to formulate a strategy to adopt the new rules and this may well lead to significant tax liabilities; something that is unlikely to have been taken into development projections that formed the basis of funding and investment appraisals.

Good news for UK based developers

However, for UK developers, this must surely be considered to be good news.  Such businesses operate in the same market place as the offshore developers, but historically have been unable to match the prices that overseas developers can pay for land given that they pay 20% corporation tax on the profits they make on each development.

Collateral damage

There will also no doubt be collateral damage.  We are likely to see legitimate overseas structures (for example, bona-fide property investors) being challenged simply by virtue of their ownership of UK property.   The aggravation factor alone will be unwelcome and the risk of HMRC challenge should mean that anyone based offshore and owning UK property would be well advised to review their position now.

In conclusion

We may find that this ultimately makes no difference to the situation as it currently stands, but my view is that it will level the playing field between UK and overseas developers as their overall post tax returns will be more closely aligned.

What remains to be seen, however, is whether this eventually puts downward pressure on residual valuations of suitable sites, which certainly over the last few years have been one of the key factors determining the shortage of supply of available land for housing.

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