FHL trading through Ltd co.

FHL trading through Ltd co.

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Husband and wife client have a cottage in grounds of PPR that they wish to holiday let.

Although they own the cottage personally, can they trade through a limited company, effectively we think the couple renting the cottage to the company for no rent, then the company renting the cottage to third parties for whatever they can get, with profits being removed (or not) via dividends etc.

Perhaps the wife owning the shares in the company as she is a lower rate taxpayer.

Any problems with that?

Tax advantages / disadvantages?

Is it legal?

As the related party transaction will need to be disclosed will this be a red rag to a bull HMRC wise and will/can they prevent it?

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