Associated Companies & Property Management Companies

by **Novice2011** on Tue Oct 11, 2011 3:53 pm

Can anyone help with some advice about associated companies? We have three associated companies so our £300k small company concession is split between the three companies (£100k each). One of the companies is a small property investment company which is owned 50/50 by myself and my husband. The company is just about to purchase a freehold property and is required to become a shareholder and director of a property management company which looks after the communal areas of the development. There are five shareholders of this property management company in total, all owners of properties within the development.

My question is: Would the property management company be classed as an 'associated company' thus watering down our £300k concession to £75k per company?

Any help would be very much appreciated. Thank you.

by **Incredulum** on Tue Oct 11, 2011 6:56 pm

It is if the companies are under common control.

http://www.hmrc.gov.uk/manuals/ctmanual/CTM03710.htm

by **pjclar02** on Fri Oct 14, 2011 9:45 am

Hello there

Depending upon the precise set-up of the property management company, there is a possibility that it will be "dormant" in the eyes of HM Revenue & Customs (HMRC).

If the property management company is viewed as "dormant" then it will not be associated for corporation tax purposes and will not dilute your tax bands further.

Dormancy for property management companies is determined by reference to a number of qualifying criteria, but typically if the management company does not have any income that is deemed taxable then HMRC will view it as dormant.

I hope this is helpful.

Best wishes

Paul
pjclar02@yahoo.com