TC09578 - [2025] UKFTT 00856 (TC)

We find the following facts after taking into account the evidence in the bundle, the evidence given by the Appellant, and the submissions from the presenting officer for the Respondent. We found it difficult to follow the Appellant’s evidence, but we found her to be a willing and truthful witness that was not seeking to mislead.

The Appellant was divorced from her ex-husband and he left the country in 2011. The Appellant and her husband were, prior to 2015, joint owners of property that yielded rental income. The nature of the ownership post 2015 was difficult to determine, the Appellant having stated both that it was put into trust for her three children in 2015 and that she and her ex-husband were each 50% owners. The Respondents did not put any questions to the Appellant regarding the ownership of the property. We find as a fact that the Appellant considers that she was a 50% owner post 2015, and that she collected rent from it. The Appellant also stated that she gave her share of the rental income to her ex-husband. This assertion was not challenged by the Respondents, and we find it to be true.

On 17 March 2017, the Respondents wrote to the Appellant’s ex-husband, granting approval for his application to collect rents without the deduction of tax under the non-resident landlord scheme. The letter went on to state, “Your rents are still liable to tax in the United Kingdom and you should enter details on your Self-Assessment Tax Return. I will arrange for a record to be set up for you and to send you the relevant tax returns.” The letter was addressed to her ex-husband, and did not name the Appellant. The letter was nevertheless opened and read by the Appellant.

The Appellant completed a Self-Assessment Tax Return for the tax year 2016/17, dated 5 October 2017, but signed 29 November 2017. In the section marked “UK property” she marked the “No” box stating that she did not have income from UK property. The Appellant also left the “Any other information” box blank.

However, on 29 November 2017 the Appellant wrote a letter addressed to “A Dalgleish, Assistant Officer, PAYE and Self-Assessment”. In that letter she referred to a letter from the Respondent dated 16 November 2017 (which we have not seen and was not in the bundle). The Appellant’s letter stated:

“Thank you for your letter dated 16 November 2017 informing me about my 2016 to 2017 tax return. After reading UK property notes & details, I would like to inform you that I don't have any income from property let jointly with my ex-husband, Mr Lao (NRL748769) who was approved to receive rental income with no tax deducted. In our divorce in 2011, instead of selling & sharing the family home, I proposed that he would have all the rental income if he agreed to put it in trust for our 3 children. Mr Lao and I, have put the family home in trust in 2015. Please advise, what else I need to do to make sure that my 2016 to 2017 tax return is accepted.”

Mrs Francis, on behalf of the Respondent, helpfully checked online during the hearing, and stated that she could not find any record of a response to that letter having been sent to the Appellant. We find that no response was sent, and we are grateful for Mrs Francis’ assistance.

The Appellant completed a Self-Assessment tax return on behalf of her ex-husband for the 2017/18 tax year, dated 20 August 2018. The return was ultimately rejected by the Respondents by letter dated 13 November 2018, as it had not been signed by Mr Lao. However, in that return she marked the box stating that he was in receipt of income from UK property and in the “Any other information” box she wrote that she passed on the income from their joint property to him, via acquaintances of his in Cambodia.

In her Self-Assessment tax return for 2017/18, the Appellant again stated that she had no income from UK property.

The Appellant’s unchallenged oral evidence was that she believed that, because she was giving her half of the rental income to her husband, she was not personally in receipt of it and did not need to declare it. We accept that this was her genuine belief.

On 31 July 2019, the Appellant phoned and spoke to the Respondents, asking whether she needed to complete a Self-Assessment Tax Return. A transcript of the conversation was included in the bundle of documents, we find that it is an accurate record of the conversation that took place.

The adviser explained that the Appellant’s self-assessment record had been automatically closed after the submission of her 2018 return because it did not meet the self-assessment criteria. The adviser asked whether the Appellant’s only income was her pension and some small amount of investment income. The Appellant replied “yes,” and stated that nothing had changed at all. She was advised by the Respondents’ adviser that she did not need to complete a Self-Assessment Tax Return.

On 27 March 2024 the Appellant again contacted the respondent by telephone. A transcript of the conversation was included in the bundle of documents, and we again find that it is likely to be an accurate record of the conversation that took place. During the conversation, the Appellant confirmed that she owned a 50% share in the rental property and that she was personally in receipt of rental income and had been since 2017. However, she also explained that she gave her half of the rental income to her husband. The Appellant was advised that if she was receiving half of the rental income it needed to be declared and tax paid upon it, even if she chose to give it away.

The Appellant contends that during that conversation she was told that there would be no interest or penalties due upon the late payments, however, we find, based upon the transcript, that this was not said or implied.

The Appellant completed tax returns for five years and posted them to the Respondents on 18 May 2024. These went undelivered, and she reposted the returns on 8 June 2024. The returns did not include a calculation of the tax due.

A Tax Calculation dated 28 August 2024 was sent to the Appellant, which she received on 5 September 2024 (however, she actually found out about the amount by checking online on 4 September 2024). We accept that the Appellant did not know how to make the payments until she contacted the Respondent’s debt management team on 6 September 2024.

The Appellant made payments of the outstanding tax by way of two bank transfers on 6 September 2024 totalling £11,797.24.