I have an unusual scenario that I would appreciate some learned input on;
A non-resident land lord allows his brother to live in his UK rental property for which he currently gets MV rent.
The brother (the tenant) owns 100% of his personal consultancy company (but the company does not pay the rent on the property).
It has been suggested that the land lord should charge a peppercorn rent (or no rent) to his brother and that he should instead acquire a shareholding (probably a restricted “B” shareholding) in his brothers company and receive dividends instead of rent.
There would be an income advantage to both individuals as the brother is a higher rate tax payer the non-resident is not entitled to a UK PA.
I assume that the non-resident brother trusts the other brother to pay the required dividends.
Any thoughts on how this may fall foul of Anti Avoidance? I can’t see how S447 would be applicable? GAAR?
Many thanks
Tom.
Replies (2)
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settlements legislation
I think the settlements legislation may apply?
http://www.hmrc.gov.uk/manuals/tsemmanual/tsem4325.htm
But would be interested to hear what others say....