Hope you can help.
New Client (Ltd Co) - first year of accounts. Their business is renting out properties on behalf of landlords. Basically estate agents but with a big twist. They approach owners of derelict properties to improve their properties to a stage whereby the properties are fit for rental. The "improvement" are paid by the client. Once the improvement is finished - the client will let out the property and pay the landlord a share of the rental income. The length of the agreement and the percentage split depends on the amount of initial expenditure on the properties. If the landlord decides to sell the property or shorten the agreement, they will be charged a penalty ... basically to recover the expenditure already spent.
Instances of expenditure could be knocking down walls (improve space), replacing kitchen units ... to buying white goods such as fridges/ televisions / furniture. These expenditures will eventually belong to the landlord once their agreement comes to an end. In the meantime, all ongoing repairs/renewals during the agreement period will also be paid by the client.
How would one treat the expenditure - Revene or Capital ?
Also, how would one treat the income - say income of £12k was shared equally between the Ltd Co and the Landlord. Would the turnover of the company be £12k and Rental payments of £6k? Or Turnover = £6k?
Most grateful for any help. Thanks