Purchase of hotel

Buyer living there for up to two years

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Potential buyer of hotel is looking to live there to manage business for a period of up to two years once he is in a position that he is happy with how business is performing.

The purchase is the property/goodwill/F&F. Normally, the most suitable vehicle for purchase in this instance would be Ltd Co but I assume the living there part would cause a BIK issue? 

In which case the best option would be to purchase property in personal name, receive rent from comapny and purchase F & F and goodwill within company and thus trading profits are taxed within Ltd co.

Are there any other options here? 

Purchaser would be sole Director/Shareholder in company and has no other income. 

Replies (6)

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RLI
By lionofludesch
12th Mar 2020 18:04

Hmm ... I have no experience in this area so take this with as big a pinch of salt as you wish, but I would've thought that he would need to be on the premises to run the hotel.

On the other hand, what is the value of a few rooms in a building ? I wouldn't've thought it was huge.

Does he want the company to own the property or would he rather own it personally ? It's a factor in deciding what argument to promote.

Thanks (1)
Replying to lionofludesch:
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By SA2016
13th Mar 2020 07:36

Thank you - the money for the majority of the purchase price is held personally so there are no IT issues in extracting this from an existing company already or anything.

They are not concerned either way, they just want it to be the most tax efficient way. The cleaner would be prop and business held in a company but I don't want any BIK issues.

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Replying to SA2016:
RLI
By lionofludesch
13th Mar 2020 09:22

SA2016 wrote:

They are not concerned either way, they just want it to be the most tax efficient way. The cleaner would be prop and business held in a company but I don't want any BIK issues.

Then it looks like you'll need to calculate the BIK and get the director to pay that to the company as rent for his bit.

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By ireallyshouldknowthisbut
12th Mar 2020 18:20

I would have thought personal ownership and rented to a hotel running company would win from a CGT and commercial POV.

There might be job related accommodation exemptions, but I guess it would be a "it depends"

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Replying to ireallyshouldknowthisbut:
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By Payroll Pete
17th Mar 2020 10:31

Agree with this - split the title and ownership from the operations, in case the operations run into trouble and suck up any BIK

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By SA2016
13th Mar 2020 07:40

Furthermore, I understand the job related accommodation exemption would not be possible due to the following:

The accommodation is not treated as job related where the accommodation is in whole or part provided by,
a company in which they or their spouse or civil partner, has a material interest

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