.png)
.png)
Our clients own freehold properties that are let at a commercial rate to a trading company of which they are directors and the only shareholders.
During 2003, the company was experiencing cashflow difficulties and needed to renegotiate facilities with its bank. To ease cashflows and to demonstrate a better net trading position to the bank, the directors/shareholders decided to temporarily reduce rents being charged to the company (which is permissible under the terms of the leases provided both sides agree). However, no formal agreement was produced to ratify the rent change.
Our clients own freehold properties that are let at a commercial rate to a trading company of which they are directors and the only shareholders.
During 2003 the company was experiencing cashflow difficulties and needed to renegotiate facilities with its bank. To ease cashflows and to demonstrate a better net trading position to the bank the directors/shareholders decided to temporarily reduce rents being charged to the company (which is permissible under the terms of the leases provided both sides agree). However no formal agreement was produced to ratify the rent change.
The bank were satisfied with things matters improved for the company and in the same year that the rent was reduced dividends were paid that were more or less equivalent to the previous drop in rental income.
HMRC are enquiring into the personal tax returns of the directors and one issue that has been raised is...
Please reach out to customer services at +44 (0) 330 161 1234 or 'customer.services@lexisnexis.co.uk' for further assistance.
