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Trust and Property Income with a limited company

Trust and Property Income with a limited company

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Good Morning.

I have a client who has a limited company which held a number of properties. Over the past year or so some of these properties have been settled into three trusts. All the income from these properties have been paid into the limited company bank account eventhough there has been no trust bank accounts set up. The limited company accounts have posted all the income in respect of properties placed into a trust loan account on the balance sheet of the limited company. I presume that when I prepare the accounts for the trust I bring the income in on a receivable basis irrespective of the fact that there are no bank accounts in existence for the trust until very recently.

I was told by a solicitor that I should adopt a receipt basis and put in nil trust returns as no money has been paid into trust bank accounts. What do other people think?



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By johngroganjga
21st Jul 2014 10:20

Yes you prepare the trust accounts as the mirror image of the trust loan account in the company's books, making any adjustments necessary for non-cash items.

But how are you accounting for company's property disposals in the company's accounts?

Never take any notice when solicitors tell you how they think you should prepare accounts and tax returns.

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By gbuckell
21st Jul 2014 10:32

Settling properties into trust?

Developing John's point, what do you mean by the company settling properties into trust? Have the IHT implications been considered?

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Replying to andy.partridge:
By DavidThrelfall
21st Jul 2014 10:48

I am getting the full details but I think the properties were in the name of an individual before they were settled into trust but the income has always gone into the limited company bank account

Will check on IHT implications

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