You seem to be stretching the point to extremes
To suggest that there is an insurance aspect over taxation is bizarre. I can obtain insurance on any vehicle that I am licensed to drive regardless of whether I am the owner or not. There is no wild contortion at all over my analogy. As for the wear and tear aspect I just think your trying to bring in a red herring. I submit taxation follows income. The person in receipt of that income is prima facie liable to pay tax on that income. That is what I interpret the legislation to say. Recent FTT decisions follow beneficlal ownership not legal ownership to tax the recipient of the income.
Your dividend example is concerned with a married couple, where different set of rules applies. There are tax planning opportunities in the example you have chosen. Quite simply all the husband need do is transfer some or all of his shares to his wife for them to benefit from her lower tax rate.
When I get the time I'll explore some more FTT cases to see if there is more support for my contention than your simplistic view that legal ownership over rides substance over form.
Flawed lorry analogy
Ok, try this. I own a lorry, I let my brother have it to use as he sees fit. He hires it out to a third party. He receives the hire income and keeps it. I do not expect to receive any part of the hire fee. Who should be taxed on the hire income, me the owner, or my brother the person who receives the income. I would contend that it is my brother who is liable for any tax on the profit from the hire income regardless of the fact that he is not the legal owner.
Your trying to overcomplicate the issue
From the facts outlined in the opening question it is quite clear that the brother in whose name the title to the property is registered does not receive the income nor does he think he is entitled to it, nor does he think he should receive it.
In the case of a property let through a letting agent quite clearly the contractual arrangement is that the property owner is entitled to the rent. Even if the agent does not pass the rent to the owner the owner is still liable for the tax on the income. Albeit he may have a bad debt he can use to offset against his property business income.
The legislation makes it very clear that "the person liable for any tax charged under this Chapter is the person receiving or entitled to ... Note the first person mentioned is the "person receiving". I would contend that it is only if he is not liable then the person entitled would become liable for the tax.
In the scenario outlined in the original question I cannot see why so many of you are arguing that the person in whose name the property is registered is in any way liable for any tax on the rental income. When he does not receive the income nor is he entitled to it. The lorry analogy I made earlier still stands. Modify it slightly to "I own a lorry and let X use it without charging him for its use". I own the lorry but I do not receive any income from it nor am I entitled to any income for it. Am I still liable for any income the asset generates? I think not.
Have any of you seen recent comments on various property portals about "rent to let". These are situations where someone rents a property from the landlord and then sub lets. Is the legal owner liable for the income from the sub lettings, whether or not formal documentation of the arrangement exists?
The case you've cited and indeed the extract from HMRC's manuals relate to the ownership proportion of jointly owned properties. The question presented in the opening post does not concern a property jointly owned by a married couple. On the facts presented the income was not received by the legal owner so I do not see how or why he is liable to be taxed on income which he did not receive. The recipient of the income is surely the person on whom the tax burden should fall. Does clause 271 ITTOIA 2005 Person liable "The person liable for any tax charged under this Chapter is the person receiving or entitled to the profits." apply, or not?
What am I missing?
If I hire a lorry and receive an income from transporting goods am I taxed on the income or is the owner of the lorry taxed on the income? Surely the person who receives the income is the person who is liable for the tax. Does it make any difference if the income producing asset is land and buildings?
Legal ownership is not the determing factor
tax legislation recognises that the legal owner of an asset is not necessarily its beneficial owner and that it is beneficial ownership which the tax principally follows. You need to clarify who benefits from the income from the property. The name of the mortgagor is a factor not the determining factor. Look on Baiili at Mrs Yvonne Lawson v. Revenue & Customs  UKFTT (346 (TC)
I would say the income is liable to Corporation tax in the hands
of the company. The trust aspect is in respect of the residents management company collecting service charges from the members in order to pay for the costs of maintaining their estate. According to my understanding of the latest advisory notes from ACA and ARMA any monies collected from the members is in trust for them. This would not apply to any income received from third parties. If the income were to be distributed to members then I would be inclined to treat it as a dividend with the associated tax credit. See HMRC PIM1070, convoluted as usual.
Why would your milkman want to perform coronary bypass surgery?
Stupid comment, ergo stupid commentator.
You do not need to report anything on the tax return
See this extract from HMRC manuals:
2003-04 and later years of assessment
An individual need not make a detailed return of chargeable gains where:
the aggregate consideration for all disposals (excluding assets which are exempt from the capital gains charge, see CG12600+, and disposals between husband and wife or between civil partners to which TCGA92/S58 applies so that neither a gain nor a loss arises on the disposal, see CG22200) does not exceed four times the annual exempt amount.andeither no allowable losses are deducted and the total chargeable gains after applying taper relief do not exceed the annual exempt amount, see CG18000+or allowable losses are deducted and the total chargeable gains before deducting losses or applying taper relief do not exceed the annual exempt amount, see CG18000+.
These conditions are reflected in the notes to the Self-Assessment return which explain when the CGT supplementary pages must be completed.
Why own it jointly?
My understanding is that if the property is not owned jointly then a declaration of trust can be made giving beneficial interest of the rental income to whoever the owner wishes.
There is an interesting article outlining the position in Residential Propery Investor July/August 2012. It is available in the writers website: taxlandlord.com