Pub benefits

My client purchased a freehold public house in May 2008 which she runs as a sole trader. She does not live on the premises.

There will be no add-backs in the tax computations apart from the private use of her car run on the business. There is no own consumption of food and all drinks are paid for at normal prices.

Her two sons and a chef (not related) manage the pub. My client formed a limited company which has issued 101 ‘A’ ordinary shares to her and 30 ‘B’ shares each to one son and the chef.

The other son who lives on the premises with his wife holds 40 ‘B’ shares. The two share classes have the same rights and there are no other shareholders.

The company manages the pub and supplies all labour in exchange for 90% of the profits after a fixed...