Revaluation and Deferred Tax

[Vass]

my 2002 auditors placed a revaluation of our freehold property in the
accounts
and a deferred tax amount

New the 2003 accounts are overdue (somewhat) and we are just going to file
them rather
than have them audited (not done any business so not really worth it)

I want to reverse the revaluation (it will be more realistic) to the
original value
so do I simply reverse the deferred tax posting or are there other factors
to consider?

 

[Troy Steadman]

my 2002 auditors placed a revaluation of our freehold property in the accounts and a deferred tax amount

New the 2003 accounts are overdue (somewhat) and we are just going to file them rather than have them audited (not done any business so not really worth it)

I want to reverse the revaluation (it will be more realistic) to the original value so do I simply reverse the deferred tax posting or are there other factors
to consider?

There are other factors to consider. "My" auditors placed a revaluation
of "our" property? Your house? Your firm's business premises? "Not done
any business"? Property ownership is a business, there are rents to
collect, rates or council tax to pay, losses to accumulate or else
profits to declare.

The deferred tax is presumably the tax on the chargeable gain which
will crystalise if the company sells the property? You can sell the
company without crystalising the gain, but who wants to buy a company
with all that potential baggage from the past. Is that why the
accounts were audited?

Invest £1,000 in proper advice from a fully qualified local firm
because drifting rudderless is not an option.

 

[Troy Steadman]

There are other factors to consider. "My" auditors placed a revaluation
of "our" property? Your house? Your firm's business premises? "Not done
any business"? Property ownership is a business, there are rents to
collect, rates or council tax to pay, losses to accumulate or else
profits to declare.

The deferred tax is presumably the tax on the chargeable gain which
will crystalise if the company sells the property? You can sell the
company without crystalising the gain

Oops! I think I mean "without crystalising so much gain" - taper relief
may cut in. This is not my field, but it is an interesting one. Many
companies historically own property. Received wisdom here seems to be
against that.

 

[Vass]

There are other factors to consider. "My" auditors placed a revaluation
of "our" property? Your house? Your firm's business premises? "Not done
any business"? Property ownership is a business, there are rents to
collect, rates or council tax to pay, losses to accumulate or else
profits to declare.

The deferred tax is presumably the tax on the chargeable gain which
will crystalise if the company sells the property? You can sell the
company without crystalising the gain

Oops! I think I mean "without crystalising so much gain" - taper relief
may cut in. This is not my field, but it is an interesting one. Many
companies historically own property. Received wisdom here seems to be
against that.

many thanks
--

 

[Troy Steadman]

Oops! I think I mean "without crystalising so much gain" - taper relief
may cut in. This is not my field, but it is an interesting one. Many
companies historically own property. Received wisdom here seems to be
against that.

many thanks

You're welcome, but while you are here why don't you post a few more
details because there are plenty in ukba for whom Capital Gains *is*
their field (my grammar-checker will be along shortly to approve that).

How did your company come to purchase a property?
Is it a private house - worse still *your* private house - or yours or
somebody else's business premises? Do you/they pay rent? If not why
not?

As to your original question Deferred Tax is a load of bollox. I would
think for small companies it is virtually extinct (except in the rare
case where a small company requires an audit) so don't get your
property revalued, leave the valuation as it is.

Learning around the subject would be good for you because it sounds as
though you may be in a deep hole.