Implications of the use of a period house as a film location

Implications of the use of a period house as a...

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I have a client that is a management company of a large period house that has been divided into a number of properties with quite extensive grounds. The management company is owned by the owners of the properties. Currently the management company only looks after the grounds and common areas as a not-for-profit organisation and only pays CT on any investment income as the charges made to the properties is designed to cover costs only. The company is not registered for VAT as the total charges made to the properties are below the VAT threshold.

They are considering marketing the house and grounds as a location for film and photographic shoots.

Would I be correct in assuming that the income is trading income and as such will be subject to CT and VAT. Therefore will it be better to form a separate company to undertake this activity and to register for VAT if the fees received exceed the VAT threshold. Otherwise the garden company will have to charge VAT to the residents on its services.

They will also have to make some provision for how any profit is going to be distributed - either by way of donation to charities (which would reduce the CT bill) or by way of dividends to the shareholders.

Neville Ford

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By User deleted
18th May 2009 13:33

CT & VAT
The income would be trading income and the profit (whatwould be the deductible expenses?) would be liable to corporation tax., but that does not make the service fee income liable to CT.

Not sure about VAT.

The profit from the film location rent could be used to reduce the service charges which would probably be better than dividends.

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