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renting caravans through a ltd company

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Hi i am hoping that somone with a bit more experiance in this field can help

A new client is in there first  year of trading as a ltd company. She has taken out a loan through the ltd company to purchase 2 caravans to rent. But the caravans have been put in her personal name as the caravan park would not allow them in the ltd company's, she got told at the time of applying for the loan that she  would only be accepted if she had a ltd company and bank account which the broker set up for her.

The caravans  have been paid for out of the business account. she is currently paying for pitch fees etc over £10k personally due to money not been available in the company bank.

my client is now worried with the caravan sites been closed and not earning any rental to cover the loan payments etc that she cant go on trading loosing everything 

my Question is should the caravans go on the asset sheet of the company , or would it be best for the company to act as a booking agent and treat the cost of the loan as a directors loan and pay the charges, and the rental on her self assement ?

many thanks in advance 

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By memyself-eye
08th May 2020 14:54

Were the vans invoiced to her or her company?

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Replying to memyself-eye:
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By jaskhan
11th May 2020 14:14

the vans were invoiced to her personally

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By paul.benny
08th May 2020 15:57

Not quite the question, but this has more than a whiff of mis-selling. The client has been induced to form a company to take out a loan by someone who then proceeded to 'sell' her a bank account. There was (apparently) no consideration of the tax consequences for her, even less so of the fact that the site owner wouldn't let pitches to companies.

Now we have no rental income and so the company may default. Because the company has actually lent money to the client personally, it becomes easier for the bank's debt collectors see through limited liability and come after her.

What a mess!

I think the start point is a formal complaint to the broker who sold the loan and required the company set up.

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Replying to paul.benny:
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By Tax Dragon
09th May 2020 11:25

A whiff of something, for sure.

Never, when applying for a loan, have I been told that the lender wouldn't lend to me, but would lend to a company I set up just for the purpose of receiving the proceeds of the loan. I don't begin to believe that's what happened in this case. And yes, that means that, if that's what the client says happened, it's her honesty I am questioning.

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Replying to paul.benny:
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By jaskhan
11th May 2020 14:19

thankyou paul

she only became aware of this when i looked at her loan agreement, also the additional mess of her been a personal guarentee and having a huge amount of interest added ontop that she was unaware of
she has tried to contact the broker but has been unsuccesful , he seams to be one of these con companies that keep on changing names.
i think maybe the ombudsman might be the way with this one

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Replying to paul.benny:
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By jaskhan
11th May 2020 14:19

thankyou paul

she only became aware of this when i looked at her loan agreement, also the additional mess of her been a personal guarentee and having a huge amount of interest added ontop that she was unaware of
she has tried to contact the broker but has been unsuccesful , he seams to be one of these con companies that keep on changing names.
i think maybe the ombudsman might be the way with this one

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Replying to paul.benny:
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By jaskhan
11th May 2020 14:19

thankyou paul

she only became aware of this when i looked at her loan agreement, also the additional mess of her been a personal guarentee and having a huge amount of interest added ontop that she was unaware of
she has tried to contact the broker but has been unsuccesful , he seams to be one of these con companies that keep on changing names.
i think maybe the ombudsman might be the way with this one

Thanks (0)
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By frankfx
09th May 2020 23:43

Sounds like ''a buy to rent a static caravan'' scheme.

With interested parties finding a way to help a naive person part with her money.

Mis -selling is definitely a starting point.

Citizens advice or a solicitor should be on the agenda.

What does OP think?

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By lesley.barnes
10th May 2020 09:56

You need to get the paperwork from your client and try to work out her liabilities and who owns what before you do anything. From what you say she could lose everything she has already spent plus more. First off is the loan to the company guaranteed by her as the Director? If so then its her debt and the banks will seek to enforce it.

If the company borrowed the money then loaned it to the Director personally to buy the caravans it has created a Directors loan - if the company does go bust the liquidators will chase the Director for the loan to be repaid.

If the caravans belong to the director personally she will still have to pay the caravan park for pitch rental and any management fees. From what you have said everything points to a sole trader - the limited company was a vehicle to get the loan. Its very odd as other posters have said I've never known any lender make someone set up a limited company just to receive a loan. Its usually the complete opposite unless it is guaranteed by the Director because of the risk to the lender.

As a first step so she has some breathing space can she get a payment holiday because of the corona virus from the loan company? Can she get anything from the rates relief? Has the caravan park offered any payment holiday on the pitch fees.

As other people have said this doesn't smell right and your client has bigger issues than how to show this in the accounts. When you've reviewed the paperwork and you are happy the situation is as she says your client really has been completly naive she needs legal advice to find a way out of this hole.

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Replying to lesley.barnes:
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By jaskhan
11th May 2020 14:28

thankyou for your reply
i have checked all the paper work out , and it is not good for my client , she has been completly missold and not aware of the pitfalls of running a ltd company

her accounts are due soon soon i am going to get a extension and advise her to get a good solicitor she does risk loosing everything

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