What to report where (amended question)

Annuity loan to purchase property held in trust ...

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A ltd owns 100% of B Ltd. A is a trading entity, B isn't. A trades from building P. A purchased P, then sold a 99% equitable interest to B for a .25% RPI linked Unsecured Perpetual Anuity Bond and used that cash (DLA funded) to pay the original sellers. A is holding B's 99% of P on trust. A's Balance Sheet shows the entire value of P.

I don't know why this happened, it was before my time.

The question is, what does B need to report in it's accounts? A is showing the property, so I'm thinking just the loan; so Cr DLA, Dr Annuity Bond debtor, then the annuity payments are Dr bank, Cr Annuity Bond, and I can file under FRS105.

What do you think?


B is paying 0.25% (say £1 for ease) pa to A for it's purchase of the 99% interest in the property. Legal title remains with A, and the full propertyy value is on A's Balance Sheet. The property title is in the name of A not B, so B doesn't have any asset on it's Balance Sheet. Am I right in thinking that a 400 year payment agreement against the hope of making a gain if the property is sold shouldn't be a creditor on B's Balance Sheet? I am proposing to just expense the £1 payments each year in B's P&L and have it as income in A's P&L - what do people think of that as a plan?

Thanks (again)

Replies (3)

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By johngroganjga
16th Sep 2019 08:54

Yes you need to reflect the sale of the 99% interest, which from what you say has not been reflected in the book-keeping so far.

You also seem to be saying that the acquisition of the annuity bond has been omitted from B’s book-keeping.

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Replying to Justin Bryant:
By atleastisoundknowledgable...
16th Sep 2019 10:56

Ah makes sense.

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