In response to your question, purchasing a holiday let with a view to renting it out to unconnected persons as an arms' length transaction, will be viewed by HMRC as commercial activity. Formal or otherwise, a partnership will have been established & I completely concur with JAADAMS that your clients should engage the services of a good solicitor with proven experience in the property rental arena, to draw up a partnership agreement.
As previously stated, the 50/50 rule only applies to married couples, so the partnership agreement should stipulate the percentage split between each partner - usually based on the percentage financed. Remember that each partner will be jointly & severally liable for all debts of the partnership irrespective of their percentage ownership, so getting a good solicitor is imperative.
With changes coming into effect shortly on how rental profits are calculated & the relief restrictions on the interest payable on any financing obtained, you should have some scope here for tax planning.
If the outstanding fees are within the County Court jurisdiction, then why not use it? As you have the client's bank account details, it may have been more appropriate to apply for a CCJ. If payment is still outstanding then apply for enforcement of the CCJ via a garnishee - the Court takes the money from the client's bank account & pays you:
On a more practical note Andrew. IR35 issues aside, if your client is NROR then you can ask the tax office to issue code NT, which will enable salary to be paid gross. Get your client to complete a form P85 (available on HMRC website) and send that in with the request to operate code NT. Remember that your client may become liable to deductions to tax & social security in the country where he/she is working. Complete form P86 when the client returns to the UK & watch the time limits for NROR (you will also need to complete the residency pages for the SA return).
There are some very useful templates on the Microsoft Office Marketplace website, under Financial tools. I have found these very useful for a task I had to do recently.
Writing to previous accountant Arnold, Phil Rees posted a very helpful answer to a similar question on 13 May, 2004. Have a look at it. I'm sure you will find it answers your question.
I agree engagement letters should be issued. You may find your PI insurers are a little more happy if you do.
There are templates on the ICAEW website. Or give me a call & I will let you have copies of mine which you can then adapt as necessary. Tel: 0845 458 9265
I have been using PTP software for last 3 or 4 years with no problems. It is easy to use & depending on the number of returns you are preparing, possibly cheaper than Digita.
Yes all shareholders are entitled to see & receive a copy of the full financial statements as prepared under CA 85, irrespective of whether these accounts have been audited. What they don't receive are the schedules which are normally prepared for the directors (which don't form part of the statutory financial statements).
My answers
In response to your question, purchasing a holiday let with a view to renting it out to unconnected persons as an arms' length transaction, will be viewed by HMRC as commercial activity. Formal or otherwise, a partnership will have been established & I completely concur with JAADAMS that your clients should engage the services of a good solicitor with proven experience in the property rental arena, to draw up a partnership agreement.
As previously stated, the 50/50 rule only applies to married couples, so the partnership agreement should stipulate the percentage split between each partner - usually based on the percentage financed. Remember that each partner will be jointly & severally liable for all debts of the partnership irrespective of their percentage ownership, so getting a good solicitor is imperative.
With changes coming into effect shortly on how rental profits are calculated & the relief restrictions on the interest payable on any financing obtained, you should have some scope here for tax planning.
Why the High Court action?
If the outstanding fees are within the County Court jurisdiction, then why not use it? As you have the client's bank account details, it may have been more appropriate to apply for a CCJ. If payment is still outstanding then apply for enforcement of the CCJ via a garnishee - the Court takes the money from the client's bank account & pays you:
http://www.legislation.gov.uk/uksi/1981/1687/part/30/made
:-)
On a more practical note
Andrew. IR35 issues aside, if your client is NROR then you can ask the tax office to issue code NT, which will enable salary to be paid gross. Get your client to complete a form P85 (available on HMRC website) and send that in with the request to operate code NT. Remember that your client may become liable to deductions to tax & social security in the country where he/she is working. Complete form P86 when the client returns to the UK & watch the time limits for NROR (you will also need to complete the residency pages for the SA return).
Hope that is of some assistance.
Excel templates
Hi Sarah
There are some very useful templates on the Microsoft Office Marketplace website, under Financial tools. I have found these very useful for a task I had to do recently.
Follow the link:
http://office.microsoft.com/en-gb/templates/CT062100751033.aspx
It's a popular theme
Paul
Someone else has asked this question just a few days ago. Check out the following link on AccountingWeb
https://www.accountingweb.co.uk/cgi-bin/item.cgi?id=126178&d=101&dateformat=%o-%B
Give me a call on 0845 458 9265 & I will let you have copies of mine.
Writing to previous accountant
Arnold, Phil Rees posted a very helpful answer to a similar question on 13 May, 2004. Have a look at it. I'm sure you will find it answers your question.
Thanks Phil!
Engagement letters
Hi Pete
I agree engagement letters should be issued. You may find your PI insurers are a little more happy if you do.
There are templates on the ICAEW website. Or give me a call & I will let you have copies of mine which you can then adapt as necessary. Tel: 0845 458 9265
I wish you well in your new venture.
Regards
Brian Armstrong
Try PTP
Hi Paul
I have been using PTP software for last 3 or 4 years with no problems. It is easy to use & depending on the number of returns you are preparing, possibly cheaper than Digita.
Try link below to get to website:
http://www.ptpgroup.co.uk/index.cfm?fuseaction=contact.content&cmid=26
Regards
Brian
Thanks
Clarissa
You're welcome
Shareholder accounts
Clarissa
Yes all shareholders are entitled to see & receive a copy of the full financial statements as prepared under CA 85, irrespective of whether these accounts have been audited. What they don't receive are the schedules which are normally prepared for the directors (which don't form part of the statutory financial statements).