Overdue Rent on Registered Office Location

If a contract is signed between family members, can backdated rent count as business expense?

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I'd like to start this post by saying my friend is an accountant, so you can't call me an accountantist...

 

I'm looking for some advice regarding my business. Registered at my mother's home despite me not actually living permanently there, I have been unable to meet the rent requirements since business conception - this changes next month as I've recently secured a long term contract.

 

As I understand, it's totally above board to be paying rent for a registered office address regardless of family connection(?), but would it be possible to pay the overdue rent as a business expense also?

I have a document signed between my mother and I to say that this is the legal office address; so I guess what I'm really asking is whether or not this will be flagged in my end of year accounts.

 

Glad to be part of the community; thanks in advance.

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By Tax Dragon
07th Jan 2024 06:51

Lewb wrote:

I'd like to start this post by saying my friend is an accountant, so you can't call me an accountantist...

 

I'm looking for some advice regarding my business. Registered at my mother's home despite me not actually living permanently there, I have been unable to meet the rent requirements since business conception - this changes next month as I've recently secured a long term contract.

 

As I understand, it's totally above board to be paying rent for a registered office address regardless of family connection(?), but would it be possible to pay the overdue rent as a business expense also?

I have a document signed between my mother and I to say that this is the legal office address; so I guess what I'm really asking is whether or not this will be flagged in my end of year accounts.

 

Glad to be part of the community; thanks in advance.

Companies cannot use cash basis.

You need a professional relationship with a different accountant to the one you have a friendship with. Your friend will confirm this.

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By Leywood
07th Jan 2024 12:13

Your first mistake was making the contract between yourself and your mother.

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RLI
By lionofludesch
07th Jan 2024 14:09

Couple of schoolboy errors highlighted by my learned friends Tax Dragon and Leywood.

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By paul.benny
09th Jan 2024 11:50

If your business is now sufficiently profitable to pay rent, it’s sufficiently profitable to pay an accountant. A decent accountant will help you structure your business appropriately. For example,it often doesn’t make sense to operate small business through a limited company.

If the agreement to use your mother’s address as registered office goes back to when the business started, you should have been accounting for the fee from then, even though it remained unpaid. And even if you weren’t previously charging it as an expense, you can backdate it – if was genuinely due. You can’t make up a new agreement today that backdates the fee.

Don’t forget, though, that your expense is income in your mother’s hands and should be declared in her self-assessment and (potentially) tax paid. And this will also affect any means tested benefits she may be receiving.

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