Readers’ forum: Corporate freeholder

I recently took on a new client who is a member of a right to enfranchisement (RTE) residential property management company consisting of ten leasehold flats. The company is limited by guarantee and only the leaseholders can be members of it. The company acquired the freehold reversion of the property in January 2001. Under the memorandum of association the company’s objects include: ‘To exercise the right to collective enfranchisement with respect to the premises.’ The set-up of this company indicates to me that it holds the freehold as nominee for the leaseholders.

The company recently sold part of the garden which was available for use by all the flat owners. The company accountant says this is a capital gain of the company and it should pay corporation tax and then distribute the net proceeds to the members as ...