Broadly, new client presented me with the following. Mr A went to prison 12 months ago and transferred his rental property to sister. Sister felt uncomfortable and (I quote) "didn't want the property as she believed it should have been split between the other siblings" so accepted the property but transferred all rental income into the account of Mr A.
Sister drew up a will stating that upon her death, the property should be left (back) to Mr A. Sister since died and the property is in the process of being transferred back to Mr A (who is still incarcerated).
Client believes Mr A should pay tax on rental income as he received it and Sister did not benefit whatsoever in any way.
Also, Mr A's brother (Mr B) sold Mr A's property after he became imprisoned, due to negative attention arising from the crime committed. Mr B used the funds to buy a different property ready for when Mr B is released. This property has been rented out in the meantime. All rents have been paid into Mr A's bank account.
Mr B intends to transfer the property to the name of Mr A imminently. Again, the only person benefiting financially is Mr A.
Client again things that the rental income should go onto Mr A tax return. CGT (regardless of who has the gain) will be covered by the AE.
Client is obviously beieving that these properties have been simply held on trust for Mr A who (they assert) is the beneficial owner.
I'm thinking this won't wash, without implicit declarations of trust.
All parties are pensioners (including the imprisoned) so whoever pays the tax on the rental income, this will be at 20%, hence no loss of tax regardless.
Any thoughts greatly appreciated while I decide whether to help them.