Sub-letting business without breaching contract

Can a business be sub-let without breaching the property lease agreement

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We have a client that runs a small, local car wash. He's run the business for almost thirty years and rents the land from a third party. He has now had enough of running the business himself and is looking to let someone take over. His plan is to let someone else run it as their own business and pay him a weekly sum for use of the facilities. They will be liable for VAT and tax on the income, as well as ensuring that the payroll is run correctly. Our client will continue to pay the rent and utlities.

However, the rent agreement has a clause that prevents him for sub-letting the land. Our client doesn't want to officially sub-let the land, but also wants to make it very clear with regards to HM Revenue and Customs that the income generated from the business is not related to him in any way. He simply receives a regular fee for use of the facilities.

Is there any way for our client to achieve what he wants without breaking the lease agreement?

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RLI
By lionofludesch
30th Nov 2016 16:25

This is an accounting website.

Not a legal advice website.

But you may get lucky.

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paddle steamer
By DJKL
30th Nov 2016 16:29

I doubt it.

He also wants to consider insurance issues if he say pays insurance premium to landlord, arrangement might, in some circumstances, compromise its scope.

As a landlord if I found out ( and I think I would if local) I would not be happy- the lack of formal assignation or sub lease may create problems for the landlord re any secured lender they have as there can evolve issues making it difficult to obtain vacant possession which may spook their lenders- when granting new standard securities to the bank (we go final next week I hope) we warrant to the bank no adverse possession.

At the least, as a landlord, we would read the riot act, at worst we would irritate the lease, especially if we discovered he was letting to the end party for more than he was paying us; after all we can probably cut out the middle man and earn a higher rent renting direct. (all subject to covenants etc)

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