UK PROPERTY DEVELOPMENT STRUCTURE

Client Scenario

Lancaster Knox acted for three co-investors in a property development business looking to expand their operations into the UK. One of the clients was 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.

Our Service 

As ever, the commercial aspects of the clients’ objectives was paramount. They required funding from a UK bank (arranged through our colleagues at Knox Capital Solutions), and the business was to be managed and controlled from new premises in the South-West.

Given the clients’ very different personal tax profiles, we worked 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. The non-UK resident individual would have suffered a 20% withholding tax on interest payments made to him, which guided our commercial suggestions.
  • 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’ lawyer to ensure our proposed 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 provision for their family.

Outcome

The taxation of UK real estate has undergone significant and ongoing reform in recent years, and keeping abreast of the latest developments is 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.

The team at Lancaster Knox 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.

Download our Case Study Summary Sheet