05-06-2011, 01:38 AM
I am doing the books for a limited company. The client took a loan for his business premises in his personal name. He currently charges the company monthly rent which he then uses to pay off the loan. When doing his personal tax return he must declare this rent and can only offset the interest against it which makes it look like he profits from the rent and must pay income tax.
The legal form of the loan is that it is in the personal name of the client but the substance is that the limited company has all the risks and rewards of ownership of the premises, ie control.
My query is, would it be lawful to include the premises as an asset of the company and the loan as a liability and then deduct the loan interest from the company accounts?
The legal form of the loan is that it is in the personal name of the client but the substance is that the limited company has all the risks and rewards of ownership of the premises, ie control.
My query is, would it be lawful to include the premises as an asset of the company and the loan as a liability and then deduct the loan interest from the company accounts?
