FHL Income apportionment - do I have to formally declare in advance?

[lizgreen333]

Hello, I own a property together with my brother and my two adult daughters.
The property is rented out successfully as a FHL. (Furnished Holiday Let)
The daughters are student-ish age and only 1% is in each of their names. This was done so that we could apportion income to them, to help pay for their University educations.

I am aware that, since the letting is done on an FHL basis, we are quite entitled to agree amongst us, how the income is apportioned. And we have done this.All the income has been funnelled to the daughters, and indeed where possible, actually paying it into accounts in their names.

What I am not sure of, is, was I (or we) supposed to file some kind of notification, with HMRC, of how we had agreed to apportion the income? (in advance?)
And if I change that for the next tax year, do I file it again, and so on?

Or can we just keep, perhaps a personal, signed-by-us-all declaration of our agreement, (basically just a sheet of paper we all sign, I guess)...which we could show to HMRC should they ever enquire?

many thanks for any help.

[maths]

There is no requirement to provide HMRC with any documentation in advance or otherwise unless and until required by HMRC.

I assume the legal title is registered in all four names?

The holders of the legal title ideally should execute a declaration of trust confirming the respective beneficial interests in the property and the respective income shares.

It would be preferable that the declaration be in the form a deed rather than simply in writing. The main difference is that a deed needs to be witnessed.

It appears that whilst the daughters hold only 1% each of the beneficial interest they receive 100% of the rental income. There are provisions under which HMRC may challenge this structure although as far as I am aware such provisions haven't been used to challenge such arrangements.

Typically, it is preferable that the income splits reflect the underlying beneficial interests. Certainly seeking to change income splits tax year to tax year is unwise.

[lizgreen333]

Thank you maths, your reply much appreciated.
For the benefit of other readers,

I confirm the legal title is registered in all four names.

We executed a declaration of trust (proper witnessed job, a la solicitor) confirming the respective beneficial interests in the property but it does not mention distribution of income.

[maths]

We executed a declaration of trust (proper witnessed job, a la solicitor) confirming the respective beneficial interests in the property but it does not mention distribution of income.

Accordingly, for income tax purposes the rental income is allocated per the respective beneficial interests.