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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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We have a jointly owned second property which has been

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We have a jointly owned second property which has been rented out over a number of years in my wife's name.She has signed the rental agreement with the housing association who deal with the lettings and the rent is payable into her personal account.Having sold the house and requesting capital gains tax forms,HMRC have declared that I am liable for tax on half the rental income where previously my wife filed returns for this.The back tax owed by me could be considerable.Can they tax me on income I have not earned?
Submitted: 7 months ago.
Category: Tax
Expert:  TonyTax replied 7 months ago.

Hi. My name is*****'m looking at your question now and will post my answer or ask for more information here in a short while.

Expert:  TonyTax replied 7 months ago.

If a property is jointly owned by a married couple, by default the rental income is divided on a 50:50 basis. Unless, that is, the property is owned in proportions other than 50:50 and a joint declaration to that effect is made using a form 17. You cannot simply allocate the income to the part owner who pays a lower rate of tax. Where the money is banked and who it is spent by is irrelevant.

I hope this helps but let me know if you have any further questions.

Customer: replied 7 months ago.
Oh dear!How many years can they go back to retrieve tax.Do they contact land registry for details?
Expert:  TonyTax replied 7 months ago.

They would normally only go back six years. HMRC does have access to Land Registry records.

It's not as if the income hasn't been disclosed at all which is something many taxpayers have been guilty of. If HMRC charge a penalty, I'd appeal against it if it is more than 30% of the tax owed. Clearly, your wife will be due some tax back.

TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15840
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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