ER conundrum

I thought I would ask readers if they have any suggestions or approaches in a fairly straightforward and what is probably a quite common situation.

My client Mr E is majority shareholder and director of his trading company Y Ltd. He has recently purchased a property and the company has moved in occupying the whole property and running the business from it.

The property is in Mr E’s name and he took out a large mortgage to help with the purchase assuming that he would be able to charge the company rent which would provide funds to pay the mortgage and capital.

Unfortunately I have had to explain that he can’t have it both ways i.e. he can’t charge rent to obtain income tax relief on the interest and still be entitled to capital gains tax entrepreneurs’ relief on a future sale of...