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Where Taxpayers and Advisers Meet

Partner Liability

Joined:Wed Aug 06, 2008 3:03 pm

Postby JimBob » Sat Jun 14, 2003 8:01 am

Having been estranged from her husband for over five years, a friend is worried that she may face her husbandÂ’s debts. Both contribute to the home but her husband no longer lives there. Despite this she fears that the money he earns outside of his main occupation, which he does not declare, is currently being investigated by the inland revenue and will put her security into danger. They both share a mortgage on the home. The question is therefore, how much does she risk losing because of her husbandÂ’s behaviour if he is found liable for the monies not declared in the past.

Lionel Hutz
Joined:Wed Aug 06, 2008 3:04 pm

Postby Lionel Hutz » Fri Jul 11, 2003 12:53 pm

Should the investigation unearth the undisclosed income, the Revenue would attempt to ascertain the amount of tax lossed, taking into account any other years affected and not only the year of investigation.

Pending the co-operation of the husband, the Revenue would on conclusion of the enquiry, invite an offer in settlement to encompass the additional Tax, interest and any penalty due. The Revenue would take into account financial circumstances and ability to pay and in some instances, allow the debt to be paid in instalments.

Only if there was little co-operation would the Revenue instigate formal powers to assess the additional tax deemed to be due. Should the debt still fail to be paid, the Collector of Taxes would consider how best to recover the debt. This ultimately could involve realising moveable assets including that of the property. If there is sufficient equity on the property, the Revenue could instigate action to realise the husband's share of the equity.

Whilst the wife cannot be held responsible for the husband's debt, it is possible for the joint property to be sold to realise the husband's debt (Scots Law). This is very much hypothetical and as stated, pending a degree of co-operation from the husband, it is very unlikely that the joint property would be sold to settle the husband's debt.

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