My client, a higher rate taxpayer, has several buy to let properties. A few years ago his mother, a non-taxpayer, wanted to acquire such a property but as she was unable to raise a mortgage, my client purchased it with the aid of a mortgage in his name. The rent has been retained by the mother and the mortgage paid by her. Apparently she has declared this on her tax returns. The Revenue have enquired into this arrangement and seem to be suggesting that the rent should have been included on my client's return. My client said that the whole family know about this arrangement (shame nobody told me!) and that all concerned feel that the property belongs to mother and that she is responsible for the mortgage. However, there is no documentary evidence, deed of trust, etc.
Can anyone provide case law or other advice that may assist me in defending my client's position.
Would it help if affidavits were obtained from all parties, setting out their intentions and should a deed of trust now be prepared confirming the beneficial ownership?