Lease extension: Corp. Tax/"benefit in kind" implications?

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    #16
    I'm not aware that companies are generally treated as transparent...

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      #17
      Some are. Example: service charge income from land ought to be taxable but, by HMRC Concession, it's disregarded for tax purposes if the outgoings on service charge account for al the income (thereby rebutting any assumption of a profit element- just as where leaseholders own F which grants each one a 999yr. lease extension 'gratuitously').
      JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
      1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
      2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
      3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
      4. *- Contact info: click on my name (blue-highlight link).

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        #18
        If you're still reading, fearnebooboo, no we didn't get it resolved, but the issue does/has not gone away and is currently enjoying a revival.

        On the issue of CorpnTax on FHCo, I've not looked exhaustively but am yet to see anything that would contradict the assumption that any revenues due would be taxed as 'trading' income, unless it is the principle that FHCo and LHlders (as directors) are connected persons & therefore, since being akin to 'trading with oneself', would not be taxable (?).

        This question of connected persons is imho a red herring elsewhere, since:
        i/ it appears that the overriding concern is the 'arm's length' principle anyway; and
        ii/ being connected, according to case law & HMRC regs, requires organisational control (which v few individual LHlders will have) or some sort of blood/trustee interrelationship between parties...

        From my reading of HMRC manuals, I'd agree that LHlders would not incur CGT if one of two situations applied:
        1. due to principal private residence relief; or
        2. if the transaction was at arm's length (ESC39) and other conditions thereunder were met

        ... but I'm not a tax expert neither

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          #19
          When leaseholders contribute to purchase of freehold, the use of company to register the freehold title is just a vehicle to hold their interest ( i.e nominee) .

          They are not putting up contribution money to a company for external trading in freeholds with the public at large. Its not a trading company.

          So they should be able to change the terms of their own leases without being taxed for "trading with themselves".

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