A client arrived to us via 2 other accountants. Him & his wife have a building which they let out as office space to other business. They own the building. On receiving their last 2 years tax returns we note that the previous accountants had this income under Schedule A. Inland revenue's view is that its a business (and we tend to lean in that direction too) and they are self-employed. Is this is correct?
Janet Taylor
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But...
The gist of the problem is still whether the income is schedule A or D. To reiterate the points made already, if the letting involves purely the provision of rooms used as offices, then it is Schedule A. If the arrangement involves the rooms plus other services such as receptionist, telephones, fax, secretarial services, etc. then this is a business.
If the income is 'A' then each person gets a share of the income and enters this on the tax return under land and property. If it is a business, then there appears to be a partnership, so there should be a partnership return and separate entries for share of partnership profits.
The number of tax inspectors is not really relevant!
(Appologies if my grasp of the SA return structure is slightly awry, but the principles are OK. My only experience of SA returns in practice are doing my own!)