I am a UK taxpayer living in the UK in a small flat that is owned by an offshore company and which I inherited. I have always thought that this is effectively my house though there is an intermediary (offshore company) between me and the flat. Someone advised that I need to pay rent to the offshore company; to apply for the non-resident land lord scheme etc and that I would be in trouble if I don’t declare this income. To me it does not make sense as I inherited the flat and it was not in my name but in the name of the company. I am not a director of the company but the ultimate shareholder through various trusts in between. I’m happy keeping the structure for privacy purposes and I’m very happy to meet all my tax obligations if needs be. The offshore company has no other investments, nor cash - just this property. Please could you tell me whether I should pay rent to myself or what action I should take?

The Corporation Tax Act 2010, s 1064 says that if a close company incurs an expense in connection with the provision of living accommodation to a shareholder - then the amount of the expense (less any amount made good by the shareholder to the company) is treated as a dividend in the hands of the shareholder. However, it is difficult for me to give a straight answer to your particular question because a) it is an offshore company; b) there are trusts in between you and the company; and c) it is not clear what kind of expenses the company is incurring. I would need more information from you in order to answer properly.