I would further add that the company is not interested in obtaining a tax relief, as long as it is legal and also does involve any ‘tax’ charge in the company.
Thank you Westbookkeeping for your response. The reason for my initial enquiry was because I could not find any legislation that deals with the tax con sequences and/or permissibility of private companies making loans to charities. The loan will be repayable and it does make senses to calculate the ‘interest’ as a qualifying donation in the ct return.
My initial reaction was that HMRC would question the very low rents the husband/wife would receive from the company. This is after many years of receiving high rents from the same properties.Also the company would be earning property management income of well over 50 per cent of gross rents: i.e industry norm is 8 to 12 per cent.
Everything appeals normal but the non-commercial transactions will certainly be scrutinised.
Thank you. Accountant A. Sorry that I posted anonymously . I have referred the client to specialist tax experts since the situation seems straight forward but highly unusual. The reason for my posting is to gather whether other fellow accountants have come across something similar.
Rigsby
Please could you let me know the outcome since one of my clients is in the same position. The tax returns were filed annually with the property pages infilled but a note stating that property losses are being made.
My answers
I would further add that the company is not interested in obtaining a tax relief, as long as it is legal and also does involve any ‘tax’ charge in the company.
Thank you Westbookkeeping for your response. The reason for my initial enquiry was because I could not find any legislation that deals with the tax con sequences and/or permissibility of private companies making loans to charities. The loan will be repayable and it does make senses to calculate the ‘interest’ as a qualifying donation in the ct return.
Typing error! I meant ‘everything appears legal’. Because of this there is a possibility that fellow accountants may have seen this.
My initial reaction was that HMRC would question the very low rents the husband/wife would receive from the company. This is after many years of receiving high rents from the same properties.Also the company would be earning property management income of well over 50 per cent of gross rents: i.e industry norm is 8 to 12 per cent.
Everything appeals normal but the non-commercial transactions will certainly be scrutinised.
Thank you. Accountant A. Sorry that I posted anonymously . I have referred the client to specialist tax experts since the situation seems straight forward but highly unusual. The reason for my posting is to gather whether other fellow accountants have come across something similar.
Rigsby
Please could you let me know the outcome since one of my clients is in the same position. The tax returns were filed annually with the property pages infilled but a note stating that property losses are being made.
Many thanks for all your replies. It will be a bitter pill to pay effectively one and a half year's ct liability within three months.
The associate company status only commenced in the year to 31st March 2013.
Many thanks for your response. There is another company which for tax purposes is an associate.