Overseas Taxation and Property Incorporation

SECTION B: ADVISORY REPORT This question is worth 25 marks. You are a tax advisor. Your client, Dr. Aris, is a highly specialized medical consultant. He was born in Greece and has a Greek domicile of origin. He moved to the UK 14 years ago and has been UK resident for 14 of the last 15 tax years. Dr. Aris has historically claimed the remittance basis of taxation for his significant overseas investment income, which remains unremitted in offshore bank accounts. In addition to his medical practice, Dr. Aris personally owns a portfolio of 10 residential properties in the UK, which he lets out. He spends approximately 25 hours a week managing this portfolio, dealing with tenants, maintenance, and financing. The properties have a combined market value of £4 million and a base cost of £2.5 million. There are no mortgages on the properties. Dr. Aris is considering transferring his entire UK property portfolio into a newly formed UK close company, Aris Properties Ltd, in exchange for 100% of the shares in the company. He wishes to do this to mitigate the restriction on finance costs (should he borrow in the future) and to facilitate estate planning. REQUIREMENTS: Prepare a report for Dr. Aris advising on: (a) The Income Tax, Capital Gains Tax (CGT), and Inheritance Tax (IHT) implications of him becoming deemed UK domiciled at the start of the next tax year. (10 marks) (b) The CGT implications of transferring his UK property portfolio to Aris Properties Ltd, specifically evaluating the availability and mechanics of Incorporation Relief (s.162 TCGA 1992). (8 marks) (c) The Stamp Duty Land Tax (SDLT) implications of transferring the 10 residential properties to the connected company. (7 marks)