Aqil requires advice on the capital gains tax (CGT) and inheritance tax (IHT) implications of gifting a warehouse to his daughter, Damia. He also requires advice on the tax consequences for a company, in which he is a director and shareholder, of its disposal and acquisition of certain capital assets.

Aqil and Damia:
– Are both resident and domiciled in the UK.
– Are both higher rate taxpayers in all relevant tax years.
– Both make disposals to fully use their annual exempt amount for CGT each tax year.

Aqil:
– Is a director and 55% shareholder in Spidera Ltd, a UK resident trading company.
– Will give a warehouse building to his daughter Damia on 1 October 2018.

Aqil’s warehouse:
– Aqil acquired the warehouse on 1 July 2006 at a cost of £62,000.
– The warehouse has always been wholly used, rent-free by Spidera Ltd since that date.
– The current market value of the warehouse is £195,000.

Damia:
– Will use the warehouse solely in her sole trader business.
– Intends to retain and use the warehouse until she sells this business in five years’ time, when the warehouse is anticipated to have increased in value.

Spidera Ltd:
– Prepares accounts to 30 June each year.
– Is owned by Aqil (55%) and Basir (45%).
– Basir is not connected to Aqil, and is neither a director nor an employee of Spidera Ltd.

Spidera Ltd – disposal of equipment:
– Spidera Ltd sold an item of fixed equipment for proceeds of £20,000 on 20 August 2018.
– The equipment had been purchased on 1 May 2012 for £65,000.
– The tax written down value of Spidera Ltd’s main pool was nil at 30 June 2018.
– Rollover relief was claimed on the purchase of the equipment to defer a chargeable gain of £38,000.
– Spidera Ltd will use the after-tax proceeds from the sale of the item of fixed equipment to purchase a motorcycle which it will give to Basir.

Required:
(b) Explain, with supporting calculations, the amount of the after-tax proceeds which will be available from the sale of the fixed equipment, and the tax consequences for both Spidera Ltd and Basir of the gift of the motorcycle. (8 marks)