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Where Taxpayers and Advisers Meet

Form 17 never filed

Jer
Posts:3
Joined:Sat Oct 21, 2023 8:26 pm
Form 17 never filed

Postby Jer » Sat Oct 21, 2023 8:44 pm

Over the past 30 years my husband (a higher rate tax payer than myself) has been paying all rental income taxes in full for my investment properties which are owned 100% by myself. All filings were done by our (Charterd) Accountants. Neither our Accountant nor we did know about Form 17 and as a result it was never submitted.

The reason my husband paid all taxes due by me is because I have health and anxiety issues: it stresses me when I deal with any business matters including tax matters. I have given my husband full Lasting Piwer if Attorney to deal with all my affairs.

HMRC have recently contacted me asking why I hadn’t filed any taxes for my investment properties. I replied (through my Accountants) that because if my health problems my husband (a higher rate tax payer) has been filing and paying all taxes due by myself. HMRC replied by requesting that I produce Form 17. I (through my Accountant) replied that I hadn’t submitted Firm 17 as we didn’t know about it. But that I had given my husband a full Piwer if Attirney to deal with all my affairs.

Is HNRC likely to take drastic action? Are there likely to impose a penalty? What would be the size of the penalty if any? What action can I take to close this matter? I ham very stressed and extremely worried. Please can you help. Thank you

someone
Posts:686
Joined:Mon Feb 13, 2017 10:09 am

Re: Form 17 never filed

Postby someone » Mon Oct 23, 2023 7:49 am

If you are 100% owner and your husband isn't a joint legal owner then HMRC are wrong to ask about Form 17 at all. It's irrelevant. Form 17 is only relevant to jointly owned property where the beneficial ownership isn't 50/50. But as you say it's owned 100% by you (you don't say if it's jointly owned or not) then it's impossible for you not to have rental income for tax purposes - either 50% (no form 17) or 100% (with form 17).

If your husband has been paying higher rate tax on the rental income instead of you at lower (or the same) rates then I cannot see HMRC being particularly concerned.

I think for the last four years you'll be able to get this put right, your husband get the tax he paid back and then pay the tax you owe. I cannot see (with a decent accountant) that you'll have to pay penalties or interest, there's been no loss of tax.

For the years before that I don't think there's much that can be done. In _theory_ HMRC could try and claim negligence and chase you for years 5 and 6 - but I cannot see that being seriously attempted - can you imagine at tribunal:
HMRC: We're claiming tax, interest and penalties because the taxpayers husband (who has power of attorney over the taxpayers affairs) negligently paid too much tax by including it in their own income which we're not repaying.

I cannot help feeling you need new accountants though (even if only to explain the situation better to you) as what you've said here doesn't make sense.

someone
Posts:686
Joined:Mon Feb 13, 2017 10:09 am

Re: Form 17 never filed

Postby someone » Mon Oct 23, 2023 8:35 am

And if it's 100% owned by you both legally and beneficially then the income is 100% yours for tax purposes.

Jer
Posts:3
Joined:Sat Oct 21, 2023 8:26 pm

Re: Form 17 never filed

Postby Jer » Mon Oct 23, 2023 10:29 am

Hi

Thank you for your reply

Just to clarify: all the properties have been solely owned by me 100% for over 30 years. My husband owns 0% of the properties. Through my accountant, he has been filing for the rental income and other taxes related to the properties in his own name, all taxes have been paid by him - always in a timely manner. Nothing is outstanding. Over the years he has been paying the taxes, my husband has also gained or lost in his own name - depending on how the tenancies on the investment properties performed

My accountant has provided HMRC all the facts, including what I say above. He has also told HMRC about my poorly state of health, including anxiety when dealing with officialdom, like HMRC (hence reason my husband filing and paying all my property related taxes, rather than myself). Also that I have given my husband full Lasting Power of Attorney to look after my affairs. We have forwarded a copy of the LPA to HMRC.

I appreciate that had my accountant filed the taxes in my own name, the total amount paid in taxes on all my properties over the past 30 years would have been significantly less than what has been paid to HMRC - as my husband is a much higher rate tax payer (my only income is the state pension - about £9,800 py in 2023).

I would very much like to close this matter with HMRC asap now. It is too stressful for me. I am not interested in making gains from this situation (by filing in my namer all the years, and my husband claiming back the amount of tax he has paid on my properties).

As far as I can see my only 'offence' is not having Form 17 in place (if indeed one is required under my circumstances I describe above. Is it?). But there was no Form 17 thirty years ago, and when it was introduced neither us nor our accountant were made aware of the requirement to have one in place.

How do I close this matter with HMRC asap and without further damage to my health? Any final thoughts would be much appreciated. Thank you again.

someone
Posts:686
Joined:Mon Feb 13, 2017 10:09 am

Re: Form 17 never filed

Postby someone » Mon Oct 23, 2023 3:50 pm

No, if you own the properties 100% (legally as well as beneficially) then form 17 is totally irrelevant. You could NOT submit form 17 as that's only appropriate for jointly owned property.

Your offence is to have not reported your income.

I would add up how much tax your husband paid on this property over the entire time and how much you would have paid. Likewise over the last twenty, six and four years. The reason for doing all four calculations is that 20, 6 and 4 years are the time limits for HMRC depending on how serious they can show in court that your behaviour was. Note that I don't expect this to go to court at all, it's just that if HMRC want to go back 20 years they have to prove that you did this deliberately (and it's going to be hard to prove that someone deliberately did their tax return wrongly so they could pay too much tax!). Likewise for 6 years they'd have to show negligence. I'm not so sure about that one - it probably is negligent (although it's disappointing that your accountants didn't ask about the property ownership up front!)

I suspect that you _have_ to fix the last four years - Your accountants should know that for definite and, assuming that is the case, I'd get on and get that worked out now (but see below)

If in all four cases the amount of tax your husband paid was larger than what you would have paid then I'd ask your accountants to write to HMRC stating those facts, that there was no loss of tax and that you would like to leave things as they are for the historical data and you will correctly report going forwards.

Included in that I'd have listed all the changes to all the tax returns over the last four years that are needed, and a signed statement from your husband saying he wants his tax refund to be used to pay your liability. That way you don't have to risk HMRC triggering a refund back to him.

But you should really heed the advice of your accountants, not some random nobody on a forum.

From what you've said it doesn't sound like you've got anything really to worry about, this is just HMRC being unreasonable - or more likely, some HMRC bod thinks they're going to get a nice big bonus because they've found someone who hasn't been paying tax for 30 years that they can claim back with interest and penalties when in fact this is a genuine mistake that has lead to no loss of tax. I'm leaning towards that explanation because the stuff about form 17 clearly shows that the person at HMRC doesn't know what they're talking about.

Jer
Posts:3
Joined:Sat Oct 21, 2023 8:26 pm

Re: Form 17 never filed

Postby Jer » Mon Oct 23, 2023 5:38 pm

Thank you so much for all the clarification. My husband will now work with our accountant to sort this out.

I do really appreciate your help. I am sure I will have undisturbed sleep tonight!


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