selling property and CGT

[cesky]

I bought a flat 4 months ago to do up and sell for profit. I do live in another one which is in the name of my family members.
1) how would taxman find out about it?
2) how long would I have to make it my principal home to avoid CGT?
3) would setting up a company help?
thanks, cesky

[buildersmate]

1) Through their various investigative channels that are on the look out for potential tax evaders such as yourself.
2) There is no minimum time limit to live in it; the term you are thinking about is called 'principal private residence'. The point is that every asset that one owns that is sold at a profit has a potnetial CGT liability, however an individual gets relief from this liability for their principal private residence (PPR). To declare this your PPR you have to live in it - at least for some of the time. The final 3 years of ownership prior to sale of a property is always free from CGT provided one has lived in it for part of that time. To prove you have lived in it, you really should consider being registered for Council Tax there.
3) No, it almost certainly wouldn't. If you set up a company to undertake property development, the house has to be owned by that company, then you would presumably pay yourself a salary as an expense to set against the profit on the sale, and of course you offset the cost of materials and any subcontractors you employ whilst doing it up. You are likely to have to be registered for VAT because of the turnover implications of what you are doing. Then on the sale, the property development company would take a profit on the difference between sale and purchase prices, less all expenses (including your salary drawn) made during the development. Small business corporation tax (at around 21%) would then be due on the net profit.

[cesky]

thank you for perfect reply, do not wish to avoid, just pay as little as poss.- don't we all? -
answered all well, many thanks, c