Pub talk planning

We have recently acquired a new client who runs a public house. He is resident in the flat above the pub and is also the owner of the public house freehold.

When I liaised with the previous accountant on most cordial terms he advised me that in previous years – when the pub profits had been higher – to avoid the publican paying Class IV National Insurance on profits a rent would be charged by the client as owner of the freehold to the pub which he also owned as a sole trader for use of the building.

This ostensibly gave rise to a deduction in the profit and loss account of the public house and rental income in the hands of the publican himself.

I gently pointed out that it is not possible for the...