I have a client just purchased a new takeaway. This is the scenario:-
Previous struggling business owner has sold the business lease and equipment in the business for £10,000. The valuation has been done between the seller and the purchaser and the equipment and goodwill values have not been separated.
The lease has been acquired by the owner and he himself is the lease holder - he has a 10 year lease. He has incorporated a company that will be running the business itself. The company will pay a rent to the leaseholder amount which is equal to the rent amount that the lease holder has to pay the landlord.
My questions are as follows:-
Since the lease is not an asset of the company, this cannot be reflected on the balance sheet of the company. Am I correct?
The acquirer has also kept possession of the equipment and rents it to the company. Agin there is no assets to be identified on the balance sheet. Am I correct?
The acquirer has to disclose the rental income on his Self Assessment; but it will have nil effect since he isnt profiting from it personally. Am I correct?
In addition, the acquirer operates payroll and has 3 permanant staff, but he has drivers, who seem to come and go. He says he might go through 10/15 drivers a year at this rate and impossible for him to set them up on the PAYE scheme. he further argues that he has no control over the drivers, they come in when needed as opposed to set times, they use their own vehicles, in downtime they wander off and dont help the business in other operation aspects, they dont turn up when they dont feel like and sometimes they send friends or family for cover when they aren't able to work. Some drivers, drive for other businesses during the week. The business owner argues that they are self employed effectively - they receive a fixed standing rate and then maybe £1 per delivery. I'm inclined to agree with him on these facts - what are others opinions? More importantly, what is the opinion of HMRC?
Thanks in advance