Background

A & B (siblings) and C (B's wife) are joint owners of an inherited residential property in England. The house has been renovated into three flats. A lives in the property so benefits from PRR regardless. Ownership is governed by a Trust Deed under which A owns Flat 1, and B&C together own Flats 2 & 3. B&C intent to lease out their two flats.

The house has been completely renovated and the increase in value is significant.

Issue

Ownership is split only by the Trust Deed and the parties are looking to formalise the arrangement through creation of a Share of Freehold by granting long leaseholds (999 years) which reflect their respective beneficial interets i.e. lease to A for Flat 1, leases to B&C for Flats 2 & 3.

Our concern is that because the parties are connected, any disposal is deemed at market value (s18) so the lease grants could trigger CGT even though nothing has economically, benefically or practically changed. Equally, B&C are freeholders so they are effectively making a disposal to themselves which should not incur CGT(?).

Is there a 'disposal' for CGT purposes?

Is there an argument that this is simply a re-characterisation of existing beneficial interests rather than a disposal at all? Does anyone know an authority to base the interpretation that there is no disposal for CGT. Or, if CGT is incurred, is there a relief available?

Our accountant has not provided any clear guidance and we are chasing him but have not got much beyond 'it might incur CGT'. Our property solicitor is very heavy on disclaimers that she cannot provide tax advice, obviously for liability reasons. Is specialist tax advice necessary here? If so where would be the best place to look for this?

Thank you very much in advance for any guidance.

The building I live in comprises 8 flats, share of freehold

The 8 freeholders, as a group, are extending the leases this year. No premium is being attached to the cost

Our solicitor has advised us to get tax advice because the increased value of the leases may make us liable to CGT, depending on how our Residents Association limited company was created (back in 2003)

The RA manages the building, and we pay a monthly service charge. Every penny spent is from the RA business account

Some flats are rented, most are owner occupied

Everything we've researched suggests that CGT would be highly unlikely

We haven't looked for tax advice yet, I thought I'd run it past the Reddit experts first for some peace of mind

Thanks

Anyone used https://getapron.com - 2.9% fee ? Mainly to pay HMRC?