Directors Use of Home as Office

[danman194uk]

I have a new client who has a Limited company however they own their home outside of the company. The property has two outbuildings which are used for business purposes. Unfortunately the client has not charged rent in the year to November 2010, however there was significant mortgage interest on the property which obviously had a business use element.

They can't go back and charge rent but could they claim use of home for the business element of the expenses including the mortgage interest, and post the corresponding entry as a credit on the directors loan account.

The intention going forward will be to charge rent and make a declaration of property income on the directors' personal tax returns.

Your thoughts would be appreciated.

Thanks

[towat]

If the director is happy to pay the personal tax on the rental income and the rent charged is not above the market rate (I don't know why it would be) I don't see a problem, however he might need to consider the restriction of the PPR relief when he sells the property.