Surely this is what HMRC's Form 17 is for. Evidence of the non equal ownership will though have to be provided with the form, i.e. a copy of a declaration of trust or other evidence to show the source of the unequal funds i.e. receipt of a gift / inheritance
AMLCC gets our vote too with Taxcalc for the id checks
I have had 20 0r 30 of these situations over the years. Since the lender has not bought a share in the property, their ultimate gain when the property is sold is an income gain assessable to income tax in the year of sale. I have consulted many solicitors about these over the years and there have been many articles in the "TAXATION" magazine too. The arrangements used to be very common in Nil Rate Band trusts where the a beneficiary would borrow the capital in exchange for an "IOU" linked to the rise in value of the property.
I have not (as yet) received any penalties for 2017/2018. I have though received over 80 on 30 clients for the 6 years to 2016/2017.
Over the last 6 years I have had about 30 trusts that suffered unlawful "early tax return" penalties. I made a FOI request and HMRC replied on 31 Aug 2018 to say that in 2011-12, 480 trust returns had a false penalty, a further 470 in 2012-13, 460 in 2013-2014 and supposedly only 10 pa in each subsequent year. I do not believe the figure of 10 and neither do my professional body as 7 of them were mine. Rather than have to prepare over 100 separate invoices to individually reclaim compensation for my clients, HMRC offered me £150 paid direct to me which I accepted in view of the work in claiming individual compensation was more than putting the problem right. With the Ombudsman refusing a Class Action against HMRC, HMRC know that they can get away with their continued failings and will never be forced to put the matter right once and for all.
I have had continuous unlawful "early tax return" penalties on a variety of trust tax returns over a 6 year period. In some years I have taken the trouble to claim compensation and this year for 2016/2017 I have taken it to the Ombudsman. Sadly the Ombudsman just said it was a genuine error on the part of HMRC as no one single trust received any more than a couple of errors. They were unprepared to take all the other cases into account thus ignoring the fact that HMRC have been issuing these unlawful penalties for 6 years on other cases.
Yes, this happens to at least a couple of clients each year, sometimes SA cases and sometimes just PAYE or repayment claim cases. HMRC never offer any explanation and have no conception of the inconvenience it causes especially for the non SA cases where we can only file a paper 64-8 and wait 2 months for it to get processed. I am 100% certain that it was not the client that revoked it.
I seem to recall that this was discussed in the Taxation Magazine recently and the answer was to do a SORN.
I am not a VAT expert, but there seems to be strong similarities here to the First Tier Tribunal case of Graham & Christine Belcher (TC5891) where the married hairdressers won their case against HMRC in proving that their individual hairdressing businesses run on the same premises were separate businesses for VAT registration even though they always prepared a partnership income tax return together. Take a read of the Taxation Magazine article in the 22 June 2017 issue by Neil Warren headed "surprise decision"
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