Tax Implications Of Owning A Wood

[Wendelspanswick]

Perhaps a mod could copy across the posts from the Husky thread.

[oldclaypaws]

I believe (but can't swear) that if you have a couple of activities at different progressive stages of the supply chain, its legitimate to split them into separate entities and have one invoicing the other, even though you may own both. For example if you own a farm and a butchers shop, you can 'sell' your own livestock to your butchers shop at a market rate.

Likewise, if you own a wood, but process some of the timber into say, wooden legs as the Oak Leg company, you could record the timber sales as tax free, selling some from your forestry business to your wooden leg business at a market rate, which is a tax deductable expense. The grey area would be it gives room for how much timber you need for each wooden leg, you could in effect lose your tax liability by inflating the amount of 'virtual' timber sold to the leg business. The whole timber sale revenue is tax free, and the more 'sold' to the other business, the lower the profit made and consequential tax liability of that too. Its difficult to prove how much is really being used.

They say a rich man who pays tax should hire a different accountant.

[Meadowcopse]

A bit like imagining say, a coffee company called 'Barstucks' having a plantation and taking raw material coffee beans as a producer under one tax regime, selling it to the 'Barstucks' holding company under a different tax regime and price - and then selling it to another operating company within its business group under another taxation regime and as a finished product and maybe using a notional price accounting structure based on a current cost of supply basis rather than the historic price of the raw material.

Surely it would be too complex to run a business along those lines and HMRC would act swiftly to plug any loopholes... (maybe)?

I've known of instances of people buying land and then selling / leasing back the same land to their personal business entity.

Some people who use a SIPP as a pension investment envelope for their woodland effectively have the SIPP owning the wood and they lease it from the SIPP 'company'