HMRC ENQ JOINT PROPERTY RENTAL INCOME CLIENT WITH PARTNER HELD BUT NOT MARRIED split 100:0

HMRC ENQ JOINT PROPERTY RENTAL INCOME CLIENT...

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Hi there everyone quick update on my enquiry that I posted here a few weeks ago.

My client owns several properties with his partner (not husband and wife) All the income and expenses have been recorded on her tax return. The tax officer has opened an enquiry into my client stating that she has information from a 'contact' that my client solely owns 3 of the properties and as such has incorrectly completed his self assessment tax returns. She has asked for details of all properties, income and expenses and detailed supporting evidence with a view to assessing any liabilities. She has also stated that a Form 17 should have been completed if 50:50 split has been changed. She knows that my client is not married.

Am I correct in thinking that

1. My client is able to agree that even though he owns 50% of the property he can still agree to his partner receiving all of the rental income.

2. I am able to reply to the local compliance officer stating that no income was received from any of the properties and was correctly recorded on his partners returns for each year.

Help required again. HMRC have replied to my letter stating that she can now accept that the properties were jointly owned and never solely. She also states that I am correct that Form 17 does not apply.

She now wishes to have sight of the original agreement between my client and his partner that he has no financial interest in the properties and also to explain why they were transferred into joint names and joint mortgages.

My questions are:

1. There was no written formal agreement between my client and his partner only a verbal ongoing one. Is this a problem?

2. The reasons for the transfer of the properties into joint names was a personal relationship one. Do I have to explain that to HMRC or can I simply say 'not relevant'

Thoughts and ideas would be helpful

Lugalugs

Replies (4)

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By david5541
06th Jul 2011 13:44

joint property and ("unmarried partners"")

i wish the likes of rebecca and mr newth would add comments on this... it is so common and yet how can hmrc insist on an agreement (whether it be form 17; deed of gift, cohabitaion or other written form) when a couple is yet "unmarried" but giving things to each other.

my enquiry on this dates back to 2004......... all the time hmrc have been trying to prove something(intent to trade) more devious than just a rich man helping out his poor unmarried partner(who moves in & out at whim) and to whom he feels responsible and therefore buys her a home.

 

ok until marraige they both get the PPR for one home and this is where the debate lies in my case, how to prove permanence or intent to live permanently.

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By johnjenkins
06th Jul 2011 14:09

It Would

appear that HMRC have accepted, in principle, that your client doesn't have a financial interest in the rental of the properties. A verbal agreement is legal (although HMRC don't like them). The reason why properties are in joint names is nothing to do with HMRC as long as evrything is legal (MLR).

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By pawncob
06th Jul 2011 17:12

Transactions
Property "transactions" have to be made in writing so they can be registered with land registry.
Agreements relating to profit share do not have to be in writing, and you can't supply what doesn't exist.
There may be implications for IHT in respect of the "gift" of income, but that's nothing to do with this enquiry.

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By Lugalugs
07th Jul 2011 10:07

HOW TO SAY THAT TO HMRC!

Thanks for all your answers guys!

I thought that that was the case about the agreement being only verbal. Going to have to write another letter to her now saying she is wrong again in asking what she's asked for!

Any ideas?

 

Lugalugs

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