Taxation magazine queries ― capital extraction of profit

Produced by a Tolley Owner-Managed Businesses expert

Owner-Managed Businesses

Guidance

Overview

The following guidance note provides details of queries raised on the extract of profit on the winding-up of a company in the last few years in the Readers’ Forum section in Taxation magazine with a link to the full replies. It should be noted that the response to the queries is at a point in time and all relevant legislation should be confirmed as being currently applicable.

Transfer of land by dividend in specie

Details of the query as copied from Taxation magazine

My client owns 100% of the shares in a successful trading company. The company owns a piece of land which my client is now looking to take into his personal ownership. The land has a value in the order of £500m. A transfer of an asset to a director would normally create a benefit-in-kind (BIK) charge and an associated National Insurance contribution (NIC) cost. But what is the position if the land is transferred by way of dividend in specie (DIS)? We know that the company has the reserves to

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