Companies Income or Individual's?

Companies Income or Individual's?

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Properties are owned personally by husband & wife and rented to tenants. The rental income is paid by the tenants directly to the company they also formed to manage the properties. Basically they did not take advice from the outset and believe the rental income belongs to the company as the rental agreements are also in the name of the company. As far as I am aware there is no lease agreement between the individuals and the company re the proeprties, so how can the rental income be the companies? Can there be a deemed lease agreement as directors and owners are on and the same? The property related expenses are also paid from the company bank account i.e. mortgage interest.
Any thoughts?
Jason Sharp

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By Tosie
09th Sep 2005 18:00

oops
There are numerous issues in this situation.
Does the lender know that a third party is receiving the income ?Did they borrow the money as individuals ? If so it is the individual who gets the tax relief.What about insurance ?
They should have a detailed lease agreement between the company and the property owner.
Without this I suspect that the revenue will be looking for tax on the rent from the individuals. What about capital gains on sale of individual properties ?

I think that you need to sit down with the directors and tell them the facts of life.
(and tax law)

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By NeilW
08th Sep 2005 09:40

Tenacies
There is no reason why the head lease can't be inferred. Nothing in law requires a tenancy to be in writing.

As long as you have evidence that the tenant paying the money has an agreement with the company, then the payment must belong to the company.

The only question then is what rent the company is paying the individual for the head lease...

NeilW

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