Client receives rental income from his sister each month for living in his previous house. This is an informal arrangement and the rent paid is much less that the market value rent. However, there is no mortgage on the property so there is actually a profit being made after bills are paid e.g. council tax. The client is adamant that this should not be declared as it is a family arrangement only. I am not sure HMRC would agree as 40% tax on the profit would be in excess of £1,000. Client is arguing saying no formal agreement, it is just money from Sister and no profit intended. Readers thoughts would be very much appreciated.
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https://www.taxation.co.uk/Articles/2015/07/21/333406/informal-letting
Great article on this very subject.
Also see lots of coverage of the Candy brothers trial (" I didn't give him millions of pounds because he was running the business, but just cos he's my bruv...")
If it's so informal then presumably he'd have no issue if the sister stopped paying him?
Oh wait, turns out it was rent after all.