Five unconnected individuals wanted to establish a private equity/venture capital fund (the ‘Fund’). The Fund vehicle was a limited partnership formed and tax resident in the British Virgin Islands (‘VC Fund LP’). The five individuals were to be the general partners in VC Fund LP.
Several queries have come up on this during 2014. Getting it right can be tricky. The principle is that where a business is carried on by a taxable person and goods forming part of that business are sold by a third party exercising a power of sale, those goods are deemed to be supplied by the taxable person in the course or furtherance of his business and VAT is chargeable (or not) on that basis.
In 2002 M who was suffering from ill health sold his interest in a thriving accountancy practice to the other two partners, C and P. Entrepreneurs’ relief was available on the gain attributable to the goodwill at the time of disposal. In 2011, M discovered that C and P had deliberately used incorrect figures to calculate the value of the goodwill.
A building consisting of two floors of offices above a shop was owned by the trustees of a small self-administered pension scheme (SSAS). The trustees, Mr and Mrs J, owned the freehold in their capacity as trustees and were also the beneficiaries of the SSAS which had been set up by their employer (E Ltd).
The client company (AS Ltd) operated as a provider of in-house counsellors and general advice to individuals suffering from addiction and depression and those who were concerned about them. Fees were charged to either patient or family.
A building had been divided into four leasehold properties, two residential units (let to A and B respectively) and two commercial units (let to C and D Ltd). The freehold of the building was owned by NGM Ltd, a property management company. A, B and D Limited were also the directors and shareholders of NGM Ltd.
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