Split of grant for businesses that pay SBRR

Split of grant for businesses that pay SBRR

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I have a client that occupies a property that is shared by three other businesses. She is eligible for SBRR and has claimed the grant and received it. My understanding from the guidlines is that there is only one grant awarded per property. My client, to be fair, wishes to split the grant between theirs and the three other businesses. The grant is technically taxable in my clients business - I am wondering how the grant allocation to the other businesses should be treated. Would each business be allocated a share of the grant in their accounts or perhaps the full income shown in my clients accounts together with 3/4 of the grant as an outgoing cost with an explanation in the 'white space' of the tax return that this is what was done and the other businesses declaring the income in their respective businesses? 

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By Southwestbeancounter
08th Apr 2020 14:48

Before you start any of those actions I would make sure that the other occupants aren't receiving their own SBRR too!

The property my office occupies is also occupied by three other small businesses and also a cafe on the ground floor - we all have our own (nil rate) rates bills apart from the cafe (who pays) and we have all got individual claims to the grant so I would be very surprised if your client's situation wasn't similar.

Thanks (1)
RLI
By lionofludesch
08th Apr 2020 14:53

Setting aside Beancounter's reservations, which are valid, good for her !!

Imho, she'll be taxable on the part she retains. The money she pays to share the grant does not have to be paid out "necessarily".

I wouldn't be entering anything in the white space. No need.

Thanks (2)
Kitten
By Hazel Accounts
08th Apr 2020 16:33

1. I also have a couple clients who have a room(s) in bigger property and they still have their own rates bills (so should be eligible for their own grant). She should check her rates bill and see what it covers - it will say area eg if it her bill just says (for eg) second floor, then the others must claim their own.

2. If she is sharing it then why not pay net of tax - so if £10k received then that's £2,500 each gross so pay £2,025 net out (assuming 19% corporation tax or adjust as appropriate if a sole trader) and put whole £10k in accounts as taxable which is what HMRC will expect to see.

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Replying to Hazel Accounts:
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By fawltybasil2575
08th Apr 2020 19:56

@ Hazel Accounts.

Forgive me, but your point (2) is incorrect, both from an Accounts and more importantly a Tax viewpoint.

There are no valid grounds for adopting your "net " approach, albeit well-intentioned.

From a purely practical perspective, there are also Class 4 implications, and other potential adverse consequences.

Your approach will result in incorrect Tax Returns being prepared, impacting adversely on your clients and (if they seek to adopt your approach too) the other tenants.

From an accounting perspective, in practice it matters little whether one enters the £10,000 as Income and the £7,500 as Expenses; or whether alternatively one enters £2,500 as Income - in order to determine which of those two alternatives is strictly correct, one would need to consider the legislation and the local authority paperwork.

Basil.

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By SXGuy
08th Apr 2020 16:48

Hold up. Check the council website and see if each of these businesses occupy their own office space in the building and that they each have a rateable value. I share a building with 3 other businesses each having their own office space and my council treat each office as its own rateable value premises. Therefore all 4 of us are entitled to the grant.

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By Ambereen Shamsi
08th Apr 2020 16:59

Thank you for your responses, its much appreciated - I will ask her to check her rates bill. I know the others don't get their own rates bill as I act for another of the businesses, but good point about it worth checking what the bill actually describes.

Taxing options also good points, I also thought maybe she could pay the others net of tax. Whatever the approach I'm guessing HMRC will look 'sympathetically' if done in the spirit of fairness in these unusual times .....?

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Replying to Ambereen Shamsi:
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By Southwestbeancounter
08th Apr 2020 17:03

Ambereen Shamsi wrote:

Thank you for your responses, its much appreciated - I will ask her to check her rates bill. I know the others don't get their own rates bill as I act for another of the businesses, but good point about it worth checking what the bill actually describes.

Taxing options also good points, I also thought maybe she could pay the others net of tax. Whatever the approach I'm guessing HMRC will look 'sympathetically' if done in the spirit of fairness in these unusual times .....?


I appreciate what you are saying in that you act for another of the businesses in the property but is it that they don't get their own rates bill or just that they don't pay rates as their bill has been reduced to nil?

We have a lot of clients that don't pay rates per their accounts but they still receive a nil bill each year but obviously don't put it in with their accounting records as there are no transactions to match it against as such.

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Replying to Southwestbeancounter:
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By Ambereen Shamsi
08th Apr 2020 17:17

Very good point - it seemed clear but I don't want to miss the potentially obvious and will certainly check for sure.

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