Readers’ forum: Declaring rent on returns

Mrs O is a director and shareholder of O Ltd. She has signed a five-year tenant repairing lease on an office in her own name. O Ltd pays the rent of £1 000 a month as well as the insurance and any repair costs relating to the office.

Mrs O decided to convert the upstairs floor of the office into a residential flat. The landlord agreed that she can do this and O Ltd paid for the conversion of the upper floor to a flat at a cost of £20 000. First should the £600 rent which is now being received for the upper floor flat be declared on Mrs O’s personal income tax return rather than the corporation tax return of O Ltd which appears to be paying for everything? Second if the rent can be shown on her tax return does Mrs O owe...