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ltd company property purchased in directors name

company looks to buy to buy property for trade; ie redevelopment and resale.

due to time constaints etc it was easier to get finance in own name. therefore property is legally owned by director although the intention was for the property to be a company asset.

actual deposit for purchase came from ltd co account.

whats the chances of this being agreed by hmrc?

are there some guidelines surrounding this sort of thing.

looked long and hard on internet but to no avail.

many thanks


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By pembo
02nd Nov 2010 16:43


you mean to treat it as if the company has bought it ?

Put bluntly not a chance. Question of fact that it is owned by the director. To include it on the balance sheet would stretch substance over form to breaking point and would essentially be illegal.

Problem areas now are:

S419/beneficial loan interest on advance to director.

Rent charged by director to cover mortgage compromises entrepreneurs relief.

50% IHT relief instead of 100%.

Advice: refinance ASAP and transfer to company at no gain/no loss. I know more costs with SDLT/legals etc but better in the long run.

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02nd Nov 2010 16:54

I don't agree

If, as a question of fact, it was agreed between the individual and the company that he was purchasing personally on behalf of the company then all that is missing is an appropriate nominee deed which expresses the facts as agreed.

Clearly, it would have been much better if this paperwork had been put in place at the outset - but there is no reason not to do it now with an appropriate narrative in the documentation about what the intentions always were.

But - I cannot emphasise too strongly that the paperwork must reflect the facts - not simply be a method of treating what was a personal transaction as a company one simply because it is now more convenient to do so.

HMRC might challenge it - but if there is adequate evidence backed up by the right paperwork they cannot win.

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By blok
03rd Nov 2010 09:13


Agree with above.

Came across this recently.  The client had solicitor draw up a simple bare nominee deed.

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By pembo
03rd Nov 2010 10:19


to a point but the ones I've come across using bare trusts seemed to work on the reasonable principle that the arrangement and trust deed was in place at date of acquisition. As a matter of interest what is the Cr double entry...the bank loan or due to the director. If the latter then presumably the company would have to pay interest under deduction of tax to counter the interest incurred by the director.

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By blok
03rd Nov 2010 11:41


Double entry:

DR Property

CR: Long term directors loan account. with associated note disclosing the fact the property was held by director as bare nominee and that the property has secured debt equal to that owed to the director.


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