Own & Rent property in UAE. No money comes into Uk.

[Mike Greg]

Hi. A few years ago my father invested in a property in Dubai but added me and my brother as owners. None of us has ever lived or worked in UAE.
The apartment was rented out. All the rent went into his Dubai account. No monies ever come out of UAE. In fact it just all stays there. And we use it, very rarely, when we are there for work or on holiday.
Unfortunately his health is not great now and can't travel or work. I went over last year and spoke to the bank. They said it might be better to open an account for me and my brothers and transfer the monies over. Which we are gradually doing.
Now the bank, very recently, called me and said they wanted my social security number. Said something about preventing us not being taxed twice.
Now this has triggered some alarm bells in me.
I just want to know does this affect our uk tax payments?
Are we supposed to pay to UAE or UK for the rental we get?
Like I said, no monies ever come into the UK.
Thanks

[darthblingbling]

If you're UK tax resident then yes, this income is taxable here.

Technically UAE has primary taxing rights as there is a DTA in place, but UAE doesn't levy an income tax anyway.

[Mike Greg]

Thanks.
What about the monies we have transferred from my farther account? Which is not part of any property income.
Do we have to pay anything for that or is it only if we transfer or bring it in?

[AGoodman]

UAE begins CRS automatic data exchange in 2018 so the bank will need your UK reference numbers (presumably NI / tax reference) in order to disclose your UAE accounts to the UAE authorities and on to HMRC.

You should be aware that there are very substantial penalties for non-disclosure of foreign income - in excess of 100% in many cases - so it is important to make sure you are in the clear before this happens. The penalties for self-disclosure are much lower.

Assuming you are all UK resident and domiciled, you are liable for UK income tax on worldwide income including rent and interest.

You do not have to pay tax on any gifts you receive, although that is a possibility if they are substantial and your father dies within 7 years of making them.

The bigger question is who owns the apartment and therefore past and future rental income. If you are a one third owner then one third of the rent was yours and you should have declared it - the fact it was paid to your father's account does not prevent it being your income. If your father remained the economic owner of the whole (and had been fully declaring the rent himself) but you were on the title to ease succession on his death then you may be able to make this out to HMRC (a little tricky as UAE law may not recognise this arrangement). Obviously it would help if that were documented somewhere and your father should have been declaring and paying UK tax on all the rent himself.

If nobody has declared the rent in the UK then there is definitely a problem and you should look to resolve it asap. These things will come out.

[Mike Greg]

Thank you for the advice.
I need to get a good account then.