Ground Rent Waiver - RTM Company

Ground Rent Waiver - RTM Company

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I have a client which is a RTM company owning the freehold of a block of flats.  The lease provides for ground rent to be paid.  As I believe quite commonly happens the Company has decided not to charge Ground Rent to its shareholders who are Leaseholders of the flats.  They have effected this by passing a Board Resolution waiving their right to demand Ground Rent.  The lease remains unchanged with the ground rent payable clause as was.
My question is, is there a possibility could HMRC demand CT on the waived rent?  If so what action should be taken to rectify the claim?

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By Portia Nina Levin
25th Apr 2015 11:24

(No subject)

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Replying to graemeban123:
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By John Renard
03rd Apr 2015 20:01

Mutuality Principle

Thank you Portia.  I went back to look at TECH 03/11 which I should have done to start with. (The Company is an RMC.)

4.3 is relevant "Where landlords do have transactions in their own right, the tax treatment depends on the nature of the income and/or expenditure and whether the principle of mutuality applies to non-service charge transactions between a company and its members where the members of the company and the leaseholders are identical."

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By jdaccountant
21st Aug 2015 19:00

Principle of mutuality
I've just been reading section 4.3 and in my search to find more info I've ended up here. So I have a circular reference! Does anyone know more than what it states in section 4.3, eg what circumstances does this principle apply and when does it not? What if some leaseholders are members, but some not?

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