Pain in the barn

A client is in the process of converting a barn on his farm at a total cost (including the original structure) of about £500 000. He intends to occupy the property on completion. The complication is that the barn is owned by the individual's company (of which he is a director) and therefore the issue of assessable benefits from the provision of living accommodation raises itself.

The director is prepared to pay a market rent for the property. However ITEPA 2003 s 107 is relevant and therefore in calculating the assessable benefit market value will be substituted for cost. It is thought that market value will be of the order of £1 million. This means that whilst an open market rent would be of the order of £25 000 the benefit before deduction of the director's contribution is nearly £58 000.

If the...