Reply to: Limited Company buying a property abroad

[SimonMac]

Limited Company buying a property abroad

Surely the OP is a sockie? I cant believe someone who's been contracting for a few years and has such capital in their company thinks they could just buy a property (and abroad at that) for their own holidays.

I mean just re read that first post again. Come on!

If he posted once and never came back with follow ups then yes I'd agree, but this ones so stupid he might just be real

[BolshieBastard]

Surely the OP is a sockie? I cant believe someone who's been contracting for a few years and has such capital in their company thinks they could just buy a property (and abroad at that) for their own holidays.

I mean just re read that first post again. Come on!

[Wijay@WISAccountancy]

There is no such rule...

Thanks again for the responses, so let me turn this around then. Can my IT company purchase the property abroad purely as a business venture, i.e. to rent out to the general public so not deemed as personal use? Or would an IT company NOT be allowed to invest in a non IT related venture?

You can invest and there is no such restrictions but you will have issues when it comes to winding up and also certain countries require you to have a local company registration to own properties..if amounts are small best to draw Dividends and buy...

[Alan @ BroomeAffinity]

Thanks again for the responses, so let me turn this around then. Can my IT company purchase the property abroad purely as a business venture, i.e. to rent out to the general public so not deemed as personal use? Or would an IT company NOT be allowed to invest in a non IT related venture?

Have you also considered what would happen when you stopped contracting? Having a property in the company might complicate matters if you were looking to wind up and claim ER for example.

[BrilloPad]

Thanks everyone. Not knowing anything about it previously I now understand this subject a lot more and to be honest it sounds more hassle than it's worth. Bloody HMRC, never miss a trick! I'll just have to save up!

And even if they do, they will slap an APN on it....

[The Tester]

Thanks again for the responses, so let me turn this around then. Can my IT company purchase the property abroad purely as a business venture, i.e. to rent out to the general public so not deemed as personal use? Or would an IT company NOT be allowed to invest in a non IT related venture?

[meridian]

Limited Company buying a property abroad

It doesn't say that at all.

It says that if the property is ONLY available to the director and their family then the director would be charged a BIK for the whole year's use. If it isn't, then Extra Statutory Concession A91 can be applied for so a BIK for the time used would apply.

Well, this is where we can argue the minutae.

For the BIK calculation, it appears that yes, if the property is only available to the director and family then BIK is charged for a full year.

ESC A91 only applies if the property is made available to other employees. Given that a PSC generally only has a director and possibly his/her spouse as employees, then it could be argued that A91 would not apply for BIK relief as the property already falls under the first head of BIK (only director and family).

What's not clear is how and whether the provision of the property at cheap rates to non-family members and non-employees impacts the calculation of BIK. I would suggest that the BIK calculation stands on it's own merits of the provision of property to directors/employees and is separate to whether the property is also provided to friends, and therefore is chargeable in full.

For Corp Tax HMRC could deem the cheap or free rent to friends to be uncommercial and restrict any expenses claimed against the property as those expenses would not be incurred wholly and exclusively in rental business.

[TheFaQQer]

Did you read the thread? As long as it's made available to the Director once in the year then there is a BIK for the full year. Add on top of that any requirements to disclose related party transactions, and all of a sudden you're liable for tax on income that you never received from your family.

It doesn't say that at all.

It says that if the property is ONLY available to the director and their family then the director would be charged a BIK for the whole year's use. If it isn't, then Extra Statutory Concession A91 can be applied for so a BIK for the time used would apply.

[The Tester]

Thanks everyone. Not knowing anything about it previously I now understand this subject a lot more and to be honest it sounds more hassle than it's worth. Bloody HMRC, never miss a trick! I'll just have to save up!

[meridian]

What about if your company buys the property & then rents it out during the year as a business?
Obviously all rentals would go through the company & any final sale of the property again would be the companies. However, the company would set the rental price accordingly & could always offer 'late deals' to anybody who would like to stay there.

Did you read the thread? As long as it's made available to the Director once in the year then there is a BIK for the full year. Add on top of that any requirements to disclose related party transactions, and all of a sudden you're liable for tax on income that you never received from your family.

[Pherlopolus]

What about if your company buys the property & then rents it out during the year as a business?
Obviously all rentals would go through the company & any final sale of the property again would be the companies. However, the company would set the rental price accordingly & could always offer 'late deals' to anybody who would like to stay there.

And make a truly bad job of marketing it? perhaps so that only family knows about it?

[Gaz_M]

What about if your company buys the property & then rents it out during the year as a business?
Obviously all rentals would go through the company & any final sale of the property again would be the companies. However, the company would set the rental price accordingly & could always offer 'late deals' to anybody who would like to stay there.

[eek]

BrilloPadQCAssured

I will guarantee a 99% return. I have a QC opinion that it will work.

As confirmed in the past many of us believe the QC opinion was more like but the supplier didn't bother to mention that part of the opinion in the advertising...

[Alan @ BroomeAffinity]

You could use an SPV to hold the property in. It's a complex and technical process but it is possible and involves creating a special share class in your trading company which the new spv would take up and then a divi could be declared to extract the funds without higher rate tax consequences. There needs to be a commercial reason for doing this otherwise HMRC might try to hammer you under GAAR. It's probably risky and might not even be feasible but it might be something you'd want to explore with your accountant. Usual caveats apply.

[BrilloPad]

Thanks. What is this scheme if I may ask?

BrilloPadQCAssured

I will guarantee a 99% return. I have a QC opinion that it will work.