Hi DJKL, no it's not retail. There is a signed agreement made between the tenant and the ltd company, which supports the idea that the rent is going to the ltd company.
Ultimately, I think they were given some bad advice in the first instance around letting it through a limited company and there doesn't appear to be any advantages to the set up to be honest.
Fair enough Wanderer, I have used this forum a lot and appreciated the advice on it though never previously contributed. Hence only just signing up.
This is an area I am unfamiliar with and only agreed to do the work as they were related to another client. At that point it became apparent that the situation was pretty informal shall we say.
Here's my thinking:
1. Yes, its property income as it is derived from giving the right to use the asset. Though the company doesn't formally have that right to give as there is no rental agreement in place with the sibling I guess this wouldn't be challenged by them.
2. The company has no rights to future income from the leasehold improvements as they don't have a formal rental agreement in place. So write the expenditure off.
3. Genuinely not sure on this point, having looked back at a number of threads on here there was some suggestion that a company could be providing a benefit to the owners by improving a property leased from them. Advice gratefully received.
My answers
Hi DJKL, no it's not retail. There is a signed agreement made between the tenant and the ltd company, which supports the idea that the rent is going to the ltd company.
Ultimately, I think they were given some bad advice in the first instance around letting it through a limited company and there doesn't appear to be any advantages to the set up to be honest.
Thanks Stepurhan, that's helpful.
I guess I was wondering if there was an effective arrangement as you mention. Wasn't sure whether that was arguable or not.
Director put the funds into the company in the first place so the purchasing of assets is made from funds lent by him originally.
Cheers
Fair enough Wanderer, I have used this forum a lot and appreciated the advice on it though never previously contributed. Hence only just signing up.
This is an area I am unfamiliar with and only agreed to do the work as they were related to another client. At that point it became apparent that the situation was pretty informal shall we say.
Here's my thinking:
1. Yes, its property income as it is derived from giving the right to use the asset. Though the company doesn't formally have that right to give as there is no rental agreement in place with the sibling I guess this wouldn't be challenged by them.
2. The company has no rights to future income from the leasehold improvements as they don't have a formal rental agreement in place. So write the expenditure off.
3. Genuinely not sure on this point, having looked back at a number of threads on here there was some suggestion that a company could be providing a benefit to the owners by improving a property leased from them. Advice gratefully received.
Thanks
Guess everyone is as clueless as me on this one then too!