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P11d query

P11d query

A client runs a pub business and trades via his own Ltd Co.

He rents the premises off the brewery. (The lease is between himself as an individual(not his Ltd Co) and the brewery itself

The rent paid to the brewery comes directly out of the Limited Company.

Does a P11d have to be completed for this?

Thank you for any help

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27th Jun 2012 17:51

Tricky

There is potential for P11d issues, but I would suggest that the company and the director draw up an agreement that the company pays rent to the director equal to the rent being paid to the brewery.  Technically the director then needs to include rental pages on his Self Assessment return, but in practice, as there will be nil profit, I can't see any problem with ignoring it.

However, I believe you will need to be careful of the VAT situation.  Is the brewery charging VAT on the rent?  It's not my area, but I can see it being a problem if the company is paying VAT chargeable to the director, who I presume is not in fact himself registered for VAT.  If you were doing this the long way around, the brewery would charge the director VAT.  Let's say it is £1,000 per month rent and £200 VAT on top.  The director would charge the company £1,200 rent.  The company is not then entitled to claim £200 VAT recovery.  It can only claim £1,200 as a deduction in P&L. 

The temptation if the company is paying the brewery direct is to claim the £200 as input VAT for the company.

But if you are a VAT expert you might just like to check my logic.

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By DMGbus
28th Jun 2012 08:55

Deemed 10% residential

The pub rental arrangements that I typically see have a monthly rental with maths (in principle) similar to the following:

£ 900.00  Commercial rent

£ 180.00  VAT @ 20% on Commercial rent

£ 100.00 VAT exempt residential rent

------------- 

£1080.00 Monthly rent payment inc VAT on 90% of rent

============================================= 

In this scenario there's only VAT on the deemed commercial part of the rent, with a deemed 10% VAT exempt residential rent.   This is the typical VAT situation, which might not be acceptable to HMRC for CT / IT / BIK purposes (some fictional not factually available value of benefit in kind for the residential part is referred to in HMRC  BIK guidance , but when a local rating authority is contacted they say no such figure exists for the private part of a public house as the property is historically a "mixed heriditament" in their records).

 

Then there's a question arising along the lines of: "can a VAT registered [the Ltd Co] entity recover VAT on a VAT invoice addressed to a non-VAT registered person [that company's director] ?"

 

 

 

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