Hope the weather is better for you. Thick fog and pouring down here!
Does anyone produce a balance sheet when dealing with a small holiday let business?
I would generally do an I & E, Capital allowance Calculations and tax computations. However, I just taken on a new client who has purchased a farmhouse with holiday cottages, campsite and caravan storage facilities. They have suggested they may have future plans for farm shop, tearooms etc so I figure this may become a bigger entity and they may indeed wish to sell as a going concern at some stage.
For this reason and also that they like looking at the figures, I feel I need to do a balance sheet but just wondering what I can actually include as assets. The whole entity was purchased as a price for Farm and Cottages, additional for Caravan Site and Storage and then additional for Equipment (which I need to find out from client what this included). A nominal amount of £1 was paid for goodwill.
My thoughts (which may be wrong!) are that the caravan site and storage shed could be included as an asset? but not the farm and cottages.
Any thoughts would be appreciated.
Thanks
Valerie
__________________
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Hi Valerie
Dull as dishwater here and a wee bit windy.
My view - best practice always produce a balance sheet for any sole trader. Mostly because many never tell you or even know their plans. Makes it easy if they incorporate etc.
Not always practical.
Re the rest, I have two suggestions, given the main respondents on here have all indicated how busy they are (I have a window on 24th December!) and its coming up to silly season:-
1) This is getting into dangerous tax territory in that a wrong decision now could spell disaster for the future, so would strongly suggest you get a tax agent on board to run the options.
and
2) Perhaps you could advise, with appropriate cash law/legislation why you have your thoughts? Might make for a proper technical debate (assuming folk have some toime to play around with it) and much easier for folk to respond to as there is no simple Q
Other thoughts just now, in now particular order
-You need to see the sales agreement
-what do the clients want to do (in an ideal world)
- do they still farm the land as well
-have they considered going limited re part of the business (food)
-what tax advice have they had so far
-inheritance tax/capital gains
-farming reliefs and restrictions
Sure Ive missed loads.
Oh yes - when was the last time a re-valuation was done? Just threw that in as the purchase could well have been a while ago.
I will have to declare myself out of this one for depth of response for a fair few days!
PS - as ever - does your PII/prof body membership cover this?
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Although I do have one FHL, it's a very basic affair with just one cottage. I agree with Joanne that tax advice is crucial here and it will pay to get a specialist on board. Happy to join in debate but my knowledge is basic.
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Thankyou for the replies. I appreciate everybody is super busy at this time.
There is no farming involved here and the property has just been purchased. I do have a copy of the completion statement which shows the breakdown of the full purchase and which I will retain for potential future sale and CGT.
Wife is running this enterprise while husband works PAYE. At the moment it is simply the letting of the furnished holiday lets and running the touring caravan site with fees taken also for storage of caravans. The future plans are only currently thoughts and may be years down the line at which point we could look at potential Ltd structure.
I do currently have a similar client with farm & cottages which was taken on from a local accountant which I guess is where I am basing my thoughts. None of the property for them appears on the balance sheet but I do of course have all the purchase details for them in case of potential future sale. They, however do not have the additional campsite which is which I believe should pose as an asset.
Valerie
__________________
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
The furnished holiday lets are assets so I need to get a split cost from the sale to ascertain their value. The farmhouse is residential only so not included and the site/ storage building also assets.
They had legal but no tax advice prior to purchasing, Doug
Thankyou both, I think I'm clear now
Valerie
__________________
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
