How we came up trumps
Mr B’s father-in-law left some money to be put into a trust for Mr B’s children, his father-in-law’s grandchildren.
Mr and Mrs B decided to use the money to buy a rental property for their children. Because it seemed the right thing to do, they put the property in their own joint names and put the rental income on their children’s Tax Returns.
When the taxman found out from his third party sources that rent was being paid on the property and could not find it on Mr B’s Tax Return, he naturally thought something was amiss.
Although Nicholas Ridge CTA explained the situation to the taxman and showed him documentation in which Mr and Mrs B declared that they held the property in trust for their children, the taxman remained unconvinced. He said that the documentation did not change the position because it was done later, and that despite the inequity of the situation, the rental income should be shown on Mr B’s Tax Return and assessed on Mr B. The local taxman’s view was backed up by in-house HMRC trust specialists.
The situation looked bleak, and even Mr B’s insurers, who pay the costs of intrusive tax enquiries, told Mr B to throw in the towel and pay the tax.
However, Nicholas Ridge CTA remained convinced that Mr B had acted correctly and persisted in arguing his case.
Eventually the taxman gave in and was persuaded to accept a compromise solution that was satisfactory to all parties.
Mr B told Nicholas Ridge CTA, you came up trumps.