Flat Management Company

Flat Management Company

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Flat Management Company, Limited by guarantee acquired the freehold for six flats. No ground rent is charged, on a service charge each year. The service charge exceeds the expenses, and the balance is being kept for future larger capital expenditure. Is this income taxable, (to CT or IT under the Trust rules). The account on which the money is held does not receive interest, so the services charges are the only amounts of 'income' received.

Help!
Gary

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By AnonymousUser
13th Jul 2006 14:49

Nyet

No tax liability arises because this is a mutual trading organisation. The only possible tax liabilities would be on transactions with outsiders, eg bank interest received, which you have already considered.

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By User deleted
14th Jul 2006 19:06

Agree
I agree with the other posts and would add that in practice I have found the Inspector will often turn a blind eye to bank interest if it is insignificant.

You can typically get the Inspector to agree to give exemption from CT returns on a 5 yearly basis.

Steve Coates
Coates Franklin Ltd

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By carnmores
17th Jul 2006 18:54

would the situation be the same if
the freehold is in the company and the shareholders are the leaseholders, presumably that would be a straight investment company

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By perry23
13th Jul 2006 19:47

Request to be exempt from CT
One further point would be to formally request to be exempt from production of Corp return. HMRC do allow this as long as accounts are sent to them periodically and activity remains the same

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