SIPP and Connected Party Turnover Rent

[OneManBanned]

Hi,

I am in the process of acquiring a former licenced premises through my SIPP. The property has been empty for a number of years and our intention is, upon completion, to seek a licence to occupy from the SIPP in order to carry our some refurbishment. Once this work is complete we will let the property to an unconnected 3rd party, or run the business from it ourselves.

The Surveyor we've engaged has said that Turnover Rents are common in the licenced trade and that it is possible that any tenant might seek to negotiate one. I have no problem with that, and the SIPP trustees have indicated that they would be happy with such an arrangement if the Surveyor was to confirm that those were acceptable commercial terms. That said, the trustees have said that I would not be able to take on a lease with the SIPP on those same terms. Obviously, it would help massively from a cashflow perspective if rent was based on turnover. I'm not looking to reduce the amount of rent I pay overall (one of the things that attracted me to this set up was that rental income is tax free (for the SIPP) and the rental expense was allowable for the trading company.

I just wondered if anyone knew whether this was the trustees being a little intransigent, or whether these are established rules set by HMRC (which I've not been able to find)?

Thanks!

[Countdown]

Could you ask the Trustees to show you which part of the Governing document prevents you from doing what you want?

[OneManBanned]

Thanks, yes I'll do that. I just wondered whether anyone here knew the answer.

Tbh, I'm not looking to rock the boat until I've acquired the property as my previous SIPP provider wouldn't even entertain taking on a pub.