Accountant advising tenant to rent through Ltd company?

No no no.

If the tenant named is an individual then the individual should pay the rent. I can’t imagine why an accountant would advise that the limited company should pay the rent – it would be treated as a salary or dividend and therefore taxable.

Okay, you could agree to accept rent from the company, but would need to document it properly. You do not want to change the tenant from the individual to the company. There’s probably nothing in it for you (or your partner) so I’d insist on payment from the tenant herself.

Is the mates rates favour indefinite Lou?
My advice- Get that sorted now prior to regular First Tier (Rental) Tribunals post summer 2025, as she has already benefitted hugely, if I read this correctly, to the tune of around £10k!
Her business model also sounds a bit questionable if that’s her sole income, as project pay back can sometimes take years, and therefore can you rely on this for consistent cash flow? Otherwise, ask her to move on while you still can using the correct procedure.

If the tenant has a Ltd company a Landlord should jump at the chance to rent to the Ltd company I would have thought.
No AST and legally required documentation. Will likely still need Gas Safety Certificate and EICR.
No need to put deposit on protection.
Could even have the tenant responsible for full insuring and repairing!
Easy to end the contract, and it is a contract, to “evict” the “tenant”. No need for 2 months notice. No need to go to Court for a Possession Order.
And can still get CCJ if monies owed.

I am no legal expert, so I could be wrong but …. if the Ltd Co pays the rent and the Ltd Co gets to be the tenant then that can open you up to the company being any person associated with that company having occupation. If the tenant wished for the company to pay (presumably for tax purposes) then if it is legitimate, could that tenant simply not claim the rent as expenses from their company?

Renting to Ltd companies comes with added complications. It’s no longer an AST and you will likely need legal help on the drafting of the contract and the management and ending of the tenancy, which would be very different to an AST.
Not renting to friends and relatives is one of the golden rules of landlording. I foresee this ending in tears unexpected costs and broken friendships.

A company let would open a can of worms. Anyone linked to the company could stay – subletting at a profit for them sounds top of the list of ideas. What if the company goes bust? Eviction would not be easy.
All the companies I’ve worked for get the employee to do the renting, and then reimburse them.

It isn’t a legal option, if a prospective tenant qualifies fir an AST then that’s the only option, if they don’t, it isn’t an AST irrespective of the written agreement.

Reply to the comment left by Judith Wordsworth at 04/10/2024 – 11:02
I appreciate what you say, but I think the potential complications outweigh any benefits. TBH, why would we want the additional legal effort, for no financial benefit?

Although the AST says no business from the premises the HMRC viewpoint is you CAN do ‘office’ and ‘administration’ tasks from a premises without it being classed as a business premises. So I think the standard AST is sufficient.

Very likely mortgage and landlords insurance expect an AST, and landlords would need a solicitor to draw up a commercial contract, so there are costs.
If this is just about allowing office functions to be conducted then just tweak that AST clause to allow home working with purely office / administrative functions (insurers and mortgage providers allow that), but no stock or business activity such as client meetings at the property that would invalidate the landlords insurance.