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Sam, Accountant
Category: Tax
Satisfied Customers: 7305
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Ownership issue from HMRC perspective

Customer Question

Hi, I have a rather complicated problem that I need help with. I started working with what is now my boyfriend/partner around 6 years ago, and have been in a relationship with him for 5 years. Prior to our business relationship, he was a professional horse rider and employed under law by an owner. When he and his previous employer split, my partner started court proceedings against his employer for the breakdown of the business. This court case took 5 years to get to court (culminating in 2012). Unfortunately the case didn't go in our favour and the judge awarded costs to his ex employer of 300k+.
My partner had sold all his assets ( car, etc) to fund the case, and so has been declared bankrupt by the court. It is relating to this that the matter becomes complicated. During the 6 years we have worked together, I have submitted personal tax returns for my personal income ( I have rental property etc) but it seems my partner hasn't submitted any tax returns, nor had he been asked to. The business we were creating was a joint company,, however I did not limit the company as we were small scale, and not turning a profit, but instead trying to build a client base etc. It had a business bank account and traded under that name, and I didn't limit the company until the court judgement arrived in 08/12, to protect the company name, with me as sole director. During the last 2 years of the court case, I had organised a sponsorship for The company, with My partner as the rider, from a company based in the British virgin isles, .( the owner was English but his company was registered offshore). They paid us sponsorship instead of paying livery costs for their horses, as it had better tax advantages for them. On occasion, if we needed a new item purchasing, such as a horse lorry, we would get the offshore company to transfer funds directly to the supplier rather than pay us ( in this case the horsebox manufacturer in the UK, where the price was 55k plus VAT ). However, we invoiced them officially for the sponsorship amount, and all ownership documents went into the name of Our company. Since the company has become limited, I have also created a VAT account, and re claimed the VAT on this item, as its for the sole use of the business. It was always the intention to make the company limited, as in our opinion, My partner was not a sole trader, As I also declared this as my occupation, and did all the website creation, ordering, finding new owners etc, and worked the same hours as My partner for the business.
We have a problem with the lorry now, as far as I was concerned, the lorry was owned by a joint company, that then became a limited company, but there is an issue of ownership by the court, as they feel My partner may personally own this asset. Bearing in mind, that I pay for its insurance, upkeep, fuel etc from my company, how do we get to the bottom of this matter? It's top value now is around 28-30k plus vat, and as I said the VAT was reclaimed through HMRC when The LTD was formalised. It seems that My partner himself never submitted any personal tax returns, and as we didn't live together until last year, I hadn't realised that was the situation. I have now moved for 3 months to france, for business reasons,and i have the lorry here with me, obviously i dont want to lose this asset, as its essential tothe business.Please help with your advice on how I move forward from here? If invoices were sent to The offshore company on Our business letterheaded paper,, how can that be taken as a sole trader?
Submitted: 3 years ago.
Category: Tax