Company constructs an asset on a Director's land...

Interesting little hypothetical scenario:

An individual owns a piece of land. He forms a Ltd Co. and this company proceeds to build a structure, say a storage shed, on the director's land. It uses the storage shed in the course of it's trade.

Now to the issue: There is no lease in place giving the company an interest in the property, so in effect the company has enhanced the value of the directors asset...?

And if so, how is it to be taxed?!

I'm thinking the cost of the construction of the structure should be treated as a BIK, under s.118 TCA 97, as the company has "incurred expense" in providing for it's director "other benefits or facilities of whatever nature"...

Anyone got a different angle on this? (supported by the legislation!)

Who much is involved and was it all paid by the company?

say for example 10k cost,

I would charge this to director via a director loan account so he would them be in debit and he has to get back to credit or he lodges enough money in to cover it

To counter-act this I would get the company to pay him an annual rent for the use of it and return the rent on his personal tax return

The annual rent can be paid by cheque or a credit in director loan account

The above is one way of doing it

No. If the shed is used in the trade of the limited company you are ok. The problem arises when the shed ceases to be used for the ltd company. At that point the company is deemed to have provided you with the value of the building minus site value which is already yours. This would have VAT and Paye implications.