Landlord incorporation - are advisers at risk?

Landlords who refinanced at incorporation generally did what responsible business owners are expected to do: they appointed professional advisers and followed the plan presented to them.

The Tribunal did not decide any individual landlord’s final tax liability, but it exposed a distinction advisers can no longer ignore. Normal banking practice is not automatically tax-neutral. Paying off an old personal or partnership mortgage with a new company loan is not necessarily the same as the company taking over that liability for ESC D32.

This does not mean every refinancing failed or every adviser was negligent. The urgent question is whether full section 162 Incorporation Relief was claimed without a properly reasoned ESC D32 analysis, and whether the client was clearly warned of the risk. If not, advisers should review their files and consider notifying their PI insurers now.

Mortgage brokers arrange finance based on the structure agreed by the client with their tax adviser and solicitor. We are not qualified to determine whether Incorporation Relief applies.

Our responsibility is to stay within our remit, recommend specialist tax and legal advice, and document this clearly. Any affected case must be reviewed individually, considering who designed the structure and what advice was provided.

Incorporation is not simply a mortgage transaction—it requires coordinated advice from appropriately qualified professionals.

The property market is full of so called 'experts' who sell courses and convince unsuspecting landlords they can circumvent the system. Mortgage Advisors do not offer advice on this and cannot be accountable for those that are caught out

Mark Alexander is right to raise this. The passage that reads like a finding is HMRC's argument in a case it lost, not a ruling on anyone's Capital Gains Tax. The tax question is real, but it's wrong to treat a losing argument as settled law. Putting properties into your own company counts as a sale, and section 162 parks only the part of the gain paid for in shares. The mortgage is part of the rest, and only concession D32 keeps it out, for business liabilities the company takes over. D32 is HMRC practice, not law, and whether a company loan clearing the old one counts as taken over is an open question. Interest runs from the original due date by law, fault or no fault. Having an adviser design it doesn't protect the landlord: the penalty test is the landlord's own reasonable care. Whether brokers, lenders or solicitors are exposed isn't mine to judge. For accountants and tax advisers: does the file show a D32 position taken at the time, and was the client warned?