Author Archives: Cetin Suleyman - Partner

About Cetin Suleyman - 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.

Company car taxation is based on emissions and much more onerous than company vans, so a switch would have led to a much higher tax bill for him and the company.

VW – Campervan or company van?

Cetin Suleyman - Partner - csuleyman@goodmanjones.com

Posted on 6th October 2015

Categories:

Having taken our summer holiday in Cornwall this year, two things struck me:

there is no such thing as bad weather, just inappropriate clothing (as coined by Sir Ranulph Twisleton-Wykeham-Fiennes)
you can’t throw a stick in Cornwall without hitting a Volkswagen camper or VW Transporter of one type or other.

Let me expand.

Having for years been put off by memories of childhood holidays in our unpredictable British summer it seems that the wet suit, or “wettie” is the answer and every day, every beach was populated by paddlers/swimmers and surfers. Granted, whilst the youngsters look okay in a wettie, I can’t say that it’s the coolest look to adopt once middle age spread starts to take hold.

Which takes me on to my second observation – VW “buses”. We saw more variations of the surf bus than I could have imagined, from pristine original VW campers, to modified VW transporter vans and without exception, everyone (middle age or otherwise) had an air of “cool” about them in their Iconic VW, whilst travelling around Cornwall’s clean and green beaches.

So it wasn’t a surprise when a property developer client asked me what the tax implications would be if he traded his company 4×4 Twin-cab pickup for a converted VW Transporter Van. He runs a fleet of Twincabs (not VW) and even though they have 5 seats, these have a fairly advantageous tax treatment when used as company vehicles.

Keeping this simple for brevity, the treatment hinges on whether the vehicle has been constructed for the purposes of carrying “burden”, or people. In this case, burden is taken to mean cargo (rather than one’s immediate, or extended family) and for his vehicles the burden requirement holds fast. However, when applied to a VW (or other) van which is then converted to add rear seats and rear windows, the burden requirement most likely fails and the vehicle would fall to be taxed as a car. Company car taxation is based on emissions and much more onerous than company vans, so a switch would have led to a much higher tax bill for him and the company.

So that concluded that and I thought nothing more of it until the news broke on the VW emissions scandal – this time my thoughts were directed towards the possible financial impact on companies and drivers in fleets containing VWs and Audis, and is the subject of today’s earlier blog.

The information in this article was correct at the date it was first published.

However it is of a generic nature and cannot constitute advice. Specific advice should be sought before any action taken.

If you would like to discuss how this applies to you, we would be delighted to talk to you. Please make contact with the author on the details shown below.

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Could the increase be backdated – after all, it’s not the Government’s fault that the figures were wrong to start with; and what if the car has been sold on by the original owner – who makes good the difference?

VW Emissions scandal – A sting in the tail for fleet owners?

Cetin Suleyman - Partner - csuleyman@goodmanjones.com

Posted on 6th October 2015

Categories:

Following the news about the VW emissions scandal, the UK Government has already launched an enquiry and said it will re-test emissions of cars in the UK. Call me cynical but why would the Government do that? I can think of two reasons:

Road Tax – is based on emissions ratings. Could it be that the annual road fund licence on affected vehicles would now be deemed too low? Could the increase be backdated – after all, it’s not the Government’s fault that the figures were wrong to start with; and what if the car has been sold on by the original owner – who makes good the difference?

Benefit-in-Kind Tax – is based on emissions ratings. The higher the emissions, the higher the tax, and without doubt many will have chosen a VW/Audi/Seat/Skoda with low emissions (and low tax) in mind.

What will be the impact on these drivers and their employers if the Government finds that the official emission ratings on those vehicles must be increased? Certainly more tax going forward but how about the past. My guess is that this would pan out as follows:

UK Government amend the CO2 emissions ratings going forward
Historically emissions ratings are reviewed and increased (up to 6 years, maybe more)
There will be increased Employers’ National Insurance liabilities on car fleet owners;
There will be a higher income tax charge on the company car drivers affected;
Disaffected and unhappy employees are not good for any employer – HR will be busy;
Could there be a requirement for companies to make provision for the additional tax costs.

As for the possibility of affected UK taxpayers pursuing VW for losses individually. I wouldn’t rule it out and wonder if the €6.5bn provision includes that too.

VW company car owners and drivers may want to keep a tab on developments that arise from the Department Of Transport’s enquiry. I know I will be – given that I have a tiny and definitely not cool shareholding VW!

The information in this article was correct at the date it was first published.

However it is of a generic nature and cannot constitute advice. Specific advice should be sought before any action taken.

If you would like to discuss how this applies to you, we would be delighted to talk to you. Please make contact with the author on the details shown below.

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It’s not just World Cup games that end in penalties – The Annual Tax on Enveloped Dwellings (ATED) Returns could lead to a few too!

Cetin Suleyman - Partner - csuleyman@goodmanjones.com

Posted on 10th July 2014

Categories:

So another World Cup match ends in penalties with the Netherlands suffering the curse of the English in last night’s game against Argentina, and I suppose it was almost inevitable that both teams would play a cat and mouse game after seeing what Joachim Low’s men did to both Brazil’s national team and its national pride the previous night.

And I can’t help thinking that penalties (of the fiscal kind) will be another inevitability for the future given the UK Government’s recent announcements to “Low”er (Sorry, I couldn’t resist that) the threshold for reporting Enveloped Dwellings from £2,000,000 to £500,000. This is part of the relatively new Annual Tax on Enveloped Dwellings regime (“ATED”)

In outline terms, the ATED rules require that high value residential property held within a corporate (or non-natural person) structure will be subject to a number of measures to combat anti-avoidance. These range from a higher rate of Stamp Duty Land Tax (SDLT) (15%) to the Annual Tax itself, assessed by reference to the valuation band in which the property sits.

In fact, “assessed” is the wrong word to use here because the ATED tax is actually based on self-assessment. It is up to the taxpayer, in this case most likely the property owner, to assess their liability and submit a return accordingly. Now the vast majority of my clients will be eligible for one of the various reliefs on the basis that they are either letting the property or developing it for resale, so does that get them off the hook?

Well, yes and no. Whilst they’ll have no tax liability they still have an obligation to file the return and that’s where penalties could come into play. Furthermore, the return appears at first glance to be an annual return but there is in fact an additional obligation to submit an ATED return 30 days after acquiring an eligible property, or 90 days after the creation of a new property. It’s worth adding at this point that a separate ATED Return must be completed for each individual Enveloped Property.

So back to penalties. The ATED penalty regime is heavy – a £100 fixed penalty for being late by a day, followed by a £10 per day fine for each of the next 90 days and then a further £300 once 6 months have passed and so on.

But let’s be practical, Enveloped Properties valued at over £2m are not that common and so one could say that at present the non-compliance risk for developers and investors, who let’s face it have a myriad of other things to contend with when acquiring properties or completing developments, is not so great.

However, next year the £2m threshold falls to £1m, and the year after it falls to £500,000. This gives an exponential increase in the number of ATED returns required, and inevitably an increase in the number of property owners falling foul of their filing obligations

And, just like all World Cup games that end up in penalties, it will seem very unfair to those on the receiving end.

The information in this article was correct at the date it was first published.

However it is of a generic nature and cannot constitute advice. Specific advice should be sought before any action taken.

If you would like to discuss how this applies to you, we would be delighted to talk to you. Please make contact with the author on the details shown below.

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Property owned in Corporate Structures – the net widens following 2014 Budget announcements

Cetin Suleyman - Partner - csuleyman@goodmanjones.com

Posted on 20th March 2014

Categories:

Property & Construction

I previously wrote on this blog a post suggesting that HMRC were keen to widen the net to bring more properties into the tax rules concerning residential property owned within a Limited company, or other “non-natural person” wrapper.

I did some research at that time and concluded that with property price inflation, even if the rules were not changed, the day wouldn’t be too far away before many “modestly” priced London properties were worth over £2m and therefore liable to the full range of tax measures.

I needn’t have bothered! Whilst not completely out of the blue, one of the announcements made in yesterday’s budget was the reduction of the £2m threshold to £500k for:

– the 15% Stamp Duty Land Tax on acquisitions,
– the Annual Tax on Enveloped Dwellings (ATED) charge, and
– the liability to Capital Gains Tax at 28% on gains.

The Stamp Duty Land Tax change is effective immediately, with the other two aspects following from 1 April 2016 onwards for properties worth between £500k and £2m. An interim provision will bring properties worth between £1m and £2m into the ATED regime from 1 April 2015. Current proposals are for the ATED to be set at £7,000 per annum for properties worth £1m to £2m, and £3,500 per annum for those worth between £500k and £1m.

HMRC state that these new measures are designed to tackle tax avoidance and not damage commercial enterprises. The Chancellor also states an intention to bring back into use large numbers of property currently sitting empty, and I can’t argue that that isn’t a good idea. For these reasons I would expect reliefs will be available in the same way as the current reliefs for property businesses. We’ll know more when the Finance Bill is released.

However, even though there may not be an actual tax impact on genuine property businesses, one cannot escape the fact that for many situations a Limited company is an attractive structure in which to acquire property. The regime as it currently operates is geared so that such property owners are presumed guilty of using their company for tax avoidance and liable for the taxes until they declare their innocence by submitting the annual ATED return, and claim one of the available reliefs. So that’s yet a further piece of annual compliance for the diary (together with a requirement to make various disclosures regarding values etc) and it comes with the usual threat of penalties for non-compliance.

Now, given that one-bedroomed flats are commanding over £500k in parts of London, and according to thisismoney.co.uk, 50% of London homes are worth more than £1m, this is not simply a “widening of the net” but more akin to sending a super-trawler up the Thames – and as Eric Cantona of Manchester United fame once said – “the seagulls follow the trawler because they think sardines will be thrown into the sea”!

The information in this article was correct at the date it was first published.

However it is of a generic nature and cannot constitute advice. Specific advice should be sought before any action taken.

If you would like to discuss how this applies to you, we would be delighted to talk to you. Please make contact with the author on the details shown below.

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Growing pains – A fly in the ointment when deciding on UK property ownership structure?

Cetin Suleyman - Partner - csuleyman@goodmanjones.com

Posted on 26th February 2014

Categories:

Property & Construction

Property investors generally look for growth in the value of their assets, so how could that growth bring them into a charge to tax that they did not expect?

Well, first some context – according to the UK Land Registry, the average house price in the Royal Borough of Kensington & Chelsea increased from £490,000 in 2003 to £1,078,000 in 2013. That’s an increase of more than double in a 10 year period. If that rate of growth continued, it would mean that a property currently worth around £900,000 in that Borough would be worth £2m in 2023.

No doubt, this is one of the reasons why there is a well-trodden path towards UK property investment, and it would look like this trend is set to continue. Savills, for example, have recently issued their forecast for house prices Savills 5-year house price forecast. They forecast growth of up to 25% in the next 5 years across the UK as a whole, so parts of the country could be far in excess of that.

Now to ownership structures. The options for the structure in which property is owned are numerous and there are a variety of tax and non-tax issues to consider. The relative importance of each will be different to each individual investor.

It is essential to consider the ownership structure from the outset as Stamp Duty Land Tax rates of up to 15% make it costly to change afterwards. The need to take advice is clear, but what if that advice suggests ownership in a corporate vehicle?

Much has already been written about the tax rules which apply to properties worth more than £2m, and owned in a corporate vehicle (enveloped dwellings). In a nutshell, the rules include a headline Stamp Duty Land Tax rate of 15%, Capital Gains Tax charges for properties sold using such vehicles and an Annual Tax charge dependent upon value.

Properties costing less than £2m are currently outside of this regime, and many investors are buying such properties – so what does the “anti-avoidance” legislation hold in store for them?

Well, HMRC have launched a consultation to explore the possibility of extending the capital gains tax aspects of the “over £2m” rules, so that they apply to lower value properties held in corporate vehicles.

The outcome of this consultation cannot be predicted, but my view is that HMRC are looking to squeeze as many properties into this taxation regime as possible. Time will tell if they do, but even if HMRC don’t pass new legislation, we can be reasonably confident that, growth in property values will at some point push many more properties into the “over £2m” rules.

Given that investors in property invariably seek capital gains, this may in time prove to be a fly in the ointment for many. However, until then it just adds one more factor to consider when deciding upon property ownership structures; whether you are a UK taxpayer or not.

The information in this article was correct at the date it was first published.

However it is of a generic nature and cannot constitute advice. Specific advice should be sought before any action taken.

If you would like to discuss how this applies to you, we would be delighted to talk to you. Please make contact with the author on the details shown below.

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Inheritance tax and property assets – Will the tide ever turn for Business Property Relief?

Cetin Suleyman - Partner - csuleyman@goodmanjones.com

Posted on 24th July 2013

Categories:

Property & Construction

Another day, another Tax Tribunal case (the “Zetland” case) found in favour of HMRC, disallowing Business Property Relief (BPR) on property based assets.

In brief, Inheritance Tax (“IHT”) is chargeable on a taxpayer’s estate at the point of death, subject to the nil-rate band (currently £325,000) and various other reliefs. Of these, one of the most important is BPR. Qualifying for BPR on death saves a tremendous 40% in Inheritance Tax on the value of the qualifying assets. If IHT planning has taken place, using trusts and lifetime gifts to mitigate the ultimate tax rate, achieving BPR at death will remove whatever charge would be left.

The rules as to what are qualifying assets for BPR are complex, and not for this blog, but as far as property letting is concerned, we have at one end of the spectrum hotels which qualify, and at the other end property held for investment / capital appreciation ( FRI Investment leases, buy-to-lets) which does not. One needs little mathematical ability to assess the impact of 40% IHT on the relatively “illiquid” and sometimes highly leveraged estates of the UK’s private property investors.

Property activities, though, frequently fall somewhere between the two extremes of hotel operations and pure investment. And as demonstrated by numerous tax cases, the tax consequence of not being at either extreme is not always clear cut.

So to the Zetland Case; this concerned an old industrial building, subdivided into fifty or so small units let on relatively short leases. HMRC assessed the taxpayers’ activities were those of property investment, and denied the claim for BPR. The tax involved was significant, so the taxpayers challenged the assessment.

The taxpayers argued that they provided many services to their tenants; a café, Wi-Fi, meeting rooms to name a few, and for this reason and certain other reasons they should qualify for BPR. They also contended that as a result of their “business” activities they had increased gross income from some £510k pa in 1997 to £2.3m in 2007, which could not have been achieved from a pure passive investment in land.

Notwithstanding this, the Tribunal found in favour of HMRC, on the basis that in the round, this was a business dealing mainly in land or making investments.

HMRC are now on a roll, having won this case and earlier this year, another BPR case concerning bed & breakfast activities (“Pawson”). Neither case was clear cut and both involved an element of “service” provision, but the taxpayers in each case were unsuccessful. With each case, however comes a little more clarity and there must surely come, at some point, a tipping point whereby the level and nature of service provision is found to constitute a qualifying business, and the property from which the business operates will qualify for BPR.

It is impossible to predict where that tipping point will be, but when it’s reached and the Tribunal decides in favour of the taxpayer, that decision could force a wholesale change to the way in which the accommodation needs of small businesses are satisfied. One thing’s for certain though: there are several people watching this space.

The information in this article was correct at the date it was first published.

However it is of a generic nature and cannot constitute advice. Specific advice should be sought before any action taken.

If you would like to discuss how this applies to you, we would be delighted to talk to you. Please make contact with the author on the details shown below.

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Contaminated land tax relief – Where there’s muck there’s brass (or possible tax savings at least)

Cetin Suleyman - Partner - csuleyman@goodmanjones.com

Posted on 10th June 2013

Categories:

Property & Construction

Much has been written about Land Remediation Relief (LRR) and the closely related Derelict Land Relief (DLR). In a nutshell these can provide land owners and property developers relief for up to 150% of qualifying costs of “cleaning up” contaminated land – eg, spend £500,000 and get tax relief against a deemed spend of £750,000. It’s very appealing.

But as they say, all that glitters is not gold and there are a few significant hurdles to get over.

Firstly, the claimant has to own the land. We all know that many deals are done on the back of “options” – where the developer who has invested years (and funds) bringing a scheme together never actually takes ownership of the land. Does this therefore bar him or her from benefiting from this generous tax relief?

Secondly, the landowner must clearly identify the remediation costs. In its most basic form this would mean writing out a cheque for the clean-up, but things don’t always work in this way. The scarcity of development funding has increased the use of barter transactions which allow clean-up operations to be funded by non-cash means, for example, the extraction of minerals or topsoil from the site, or removal of metal structures for scrap value to name just two possibilities.

These make the reliefs seemingly impossible to obtain in certain situations. However, a good understanding of the mechanics of LRR and DLR can help immensely. For example – when negotiating the sale of the option, which may involve the upside of a share of surplus profits sometime in the future, it would be invaluable to know what level of tax relief the building contractor would be entitled to when they remediate the land. Similarly, careful advance planning of barter transactions can ensure that clean-up costs are properly identifiable, thus enabling the land owner to make a claim for tax relief.

Finally, these reliefs are Corporation Tax specific, and available only to Limited Companies. What this does is add yet another ingredient to the already complicated answer to the question “What business structure should we use?”

The information in this article was correct at the date it was first published.

However it is of a generic nature and cannot constitute advice. Specific advice should be sought before any action taken.

If you would like to discuss how this applies to you, we would be delighted to talk to you. Please make contact with the author on the details shown below.

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Flat Conversion Allowances – Get ‘em while they’re hot!

Cetin Suleyman - Partner - csuleyman@goodmanjones.com

Posted on 14th June 2012

Categories:

In May 2012, HM Treasury released its consultation paper relating to the “enveloping” of high value residential property.

Much has been written about it already, so I won’t bore with another summary – but it made me want to revisit what had resulted from a previous consultation issued in May 2011. If you missed that one, it was entitled “Consultation on the removal of 36 tax reliefs” – I can’t deny that the title is snappy and to the point.

Using the Government’s words, that consultation was issued so as “to simplify the tax system through the removal of reliefs”.

So let’s pick one of the 36 at random – Flat Conversion Allowances – and see what happened to that relief?

Well, no prizes for guessing that in December 2011, Flat Conversion Allowances (sometimes called Flats Above Shops relief) were repealed and they will be withdrawn for expenditure incurred after March 2013.

It strikes me as odd, that when there is a shortage of affordable property in parts of the UK, and when the smaller end of the construction industry is on its knees, the relief is repealed. Or, perhaps there is greater wisdom involved in that by giving advance notice of the repeal, it will accelerate property owners’ decisions to convert and give a much needed boost to the construction sector (I’ll leave the funding issues as a matter for another day!)

All I know is that anyone thinking about converting under-used space above commercial premises may want to revisit this relief and reconsider the timing of their plans if they want to claim the currently available 100% capital allowances.

The information in this article was correct at the date it was first published.

However it is of a generic nature and cannot constitute advice. Specific advice should be sought before any action taken.

If you would like to discuss how this applies to you, we would be delighted to talk to you. Please make contact with the author on the details shown below.

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15% SDLT – “Stop the world, I want to get off – well at least until the 2012 Finance Act is passed”

Cetin Suleyman - Partner - csuleyman@goodmanjones.com

Posted on 19th April 2012

Categories:

We’re well aware of the recent budget announcement for a 15% SDLT charge on certain property acquisitions, but this created a hiatus period between the budget being announced and the likely passing of the Finance Act in June/July 2012.

Let’s summarise below what the Finance Bill currently states:

A punitive SDLT rate of 15% will apply where a residential property costing over £2m is purchased by anything other than a person, eg, a Limited Company. The SDLT rate for a “person” making that same purchase would be 7% so clearly, this has a big impact – even on a £2m acquisition the difference in SDLT is £160,000.

When drafting the 2012 Finance Bill, the Government have clearly listened to property developers and so have included a very narrow exclusion for them. The current draft therefore allows those developers who buy the property in the course of a bona fide property development business and for the sole purpose of “developing and reselling the LAND” to pay 7%, and not 15% SDLT.

Furthermore, the property development company must have carried on that business for at least two years before the transaction to qualify.

Note the inference that the company must make the purchase with a view to development and resale – not holding for investment purposes. There is no indication as to how any change of intention will be taxed.

There are therefore TWO particular risks for anyone currently making a relevant acquisition:

1. That there is some change to the drafting of the Finance Bill before it is finally passed that makes the criteria more strict for example, the 2 years standing is increased – this is remote, but a risk nevertheless.

That the get out for property developers is narrower than my reading of it would infer. Of specific interest is the word LAND that I have written in capital letters above.

The legislation refers specifically to “reselling the land” but does the re-development of a building count as “land”. I’m sure there is case law around to support one view or the other, and the chances are that this is not as significant as feared – but hey, when we’re talking about £160,000 in SDLT even on a £2m purchase, it would be unwise to ignore this risk.

So until the Finance Act is passed as law, uncertainty reigns supreme and leaves two obvious questions:

– what exactly are corporate developers supposed to do, and

– what does this do to the high end residential property market?

The information in this article was correct at the date it was first published.

However it is of a generic nature and cannot constitute advice. Specific advice should be sought before any action taken.

If you would like to discuss how this applies to you, we would be delighted to talk to you. Please make contact with the author on the details shown below.

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Construction Industry Scheme and Gross Payment Status

Cetin Suleyman - Partner - csuleyman@goodmanjones.com

Posted on 8th January 2009

Categories:

Following on from Graeme’s post about the Time to Pay arrangements.

Are you in the Construction Industry? Have you got Gross Payment status? If you have, you’ll know how valuable that status is, and you’ll be well aware that losing that status could lead to a loss of up to 20% of cash inflow. And that would be terminal for many businesses.

In these difficult times of slowing customer payments and restricted funding from banks, it’s easy to allow PAYE and Corporation Tax payments to take a back seat to other creditors. But if you do you could be putting your Gross Payment status at risk.

Under its recently published “Time to Pay” scheme, the Inland Revenue has clarified that businesses entering into an arrangement under it will not lose their gross payment status.

But it’s vital the business agrees the Time to Pay arrangement before payment is due, not after. And whilst there is still a risk that the “computer” will send out automatic notices of revocation, the Inland Revenue has also confirmed these will be cancelled on immediate appeal.

So the message is – use the scheme or lose the status.

The information in this article was correct at the date it was first published.

However it is of a generic nature and cannot constitute advice. Specific advice should be sought before any action taken.

If you would like to discuss how this applies to you, we would be delighted to talk to you. Please make contact with the author on the details shown below.

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Author Archives: Cetin Suleyman - Partner

About Cetin Suleyman - Partner

Company car taxation is based on emissions and much more onerous than company vans, so a switch would have led to a much higher tax bill for him and the company.

VW – Campervan or company van?

Could the increase be backdated – after all, it’s not the Government’s fault that the figures were wrong to start with; and what if the car has been sold on by the original owner – who makes good the difference?

VW Emissions scandal – A sting in the tail for fleet owners?

It’s not just World Cup games that end in penalties – The Annual Tax on Enveloped Dwellings (ATED) Returns could lead to a few too!

Property owned in Corporate Structures – the net widens following 2014 Budget announcements

Growing pains – A fly in the ointment when deciding on UK property ownership structure?

Inheritance tax and property assets – Will the tide ever turn for Business Property Relief?

Contaminated land tax relief – Where there’s muck there’s brass (or possible tax savings at least)

Flat Conversion Allowances – Get ‘em while they’re hot!

15% SDLT – “Stop the world, I want to get off – well at least until the 2012 Finance Act is passed”

Construction Industry Scheme and Gross Payment Status