Readers' forum: Rent recovery?

Company A bought the freehold of a former factory (contracted and completed in August 2015) with the intention of converting it to residential accommodation and the subsequent letting by sister company B to which the property would be transferred after conversion. Expert capital allowances surveyors determined the proportion of the purchase price eligible for plant and machinery capital allowances (£225 000) and integral features capital allowances (£60 000).

The property was converted and the freehold sold to the sister company (at market value) in January 2018. The onward sale to the sister company was advised as necessary for VAT recovery purposes. Neither A nor B is UK resident.

The profit earned by A – being the sale price to B less the purchase cost to A less the conversion costs and less other incidental development costs – will be returned as trading income (about £350 000 net)...