Help! HMRC want another 20% Tax from my Savings Interest

sdooley

The legal ownership of the money is 100% yours.

The beneficial ownership you could argue is 50:50 - the Revenue would say if so why didn't you set up a joint bank account - you might reply that the use of the interest shows the real ownership and that that was the arrangement agreed between the two of you - the Revenue will likely say 'prove it'.

What happens on divorce has absolutely no bearing on how ownership of assets is treated during a marriage. You are not divorced until you are divorced.

System

Tudor wrote: »

I set up a deposit account when we sold our house 3 years ago and went into rented accomodation.

If the property was in joint names and you can prove that the capital in your account was the proceeds of the sale of that property then I agree with sdooley that you would surely have a strong argument that the interest earned was joint interest and only your half would be liable to tax at 40%. I would expect though that HMRC would have to see significant proof including documents/deeds.

Hungerdunger

The reason the account was in his sole name is in the duplicate post he made on the savings forum - post #4.

Mikeyorks

Tudor wrote: »

if we had split up at the time we sold our house, my wife would still have had a legal entitlement to half that money.
So, surely, the 'asset' is owned 50/50 and should be taxed accordingly?

Your wife had a legal entitlement to her portion (it's not necessarily 50:50 if you've opted otherwise) of the money without you splitting up.

But 'you' chose to deposit in a singleton account .... so the tax charge on the interest falls the same way. If (my earlier post) HMRC had to validate the underlying origination of all funds and tax accordingly ... there would be chaos. In this case the interest is chargeable against you and that's how HMRC are proceeding. 'But it wasn't really my money' doesn't hold sway in money laundering cases ... nor will it here.

jennifernil

There is a well known saying...."you cannot have your cake and eat it"....

You chose to keep the money in your own name only.....so YOU are liable for the tax on the interest.

sdooley

Hungerdunger: well that shows the money was his and one suspects the way the account had been managed reflects that.

Pam17: I think the has a weak argument that the beneficial ownership is 50:50, especially considering the returns have been claiming the interest was 100% his wife's, which is manifestly wrong. But it's the best argument he has.

Tudor_2

ok. Thanks for all your views. Just to update on this I have heard from HMRC this morning and Yes, they want the other 20% + interest + the rebates that my wife has received over the last 3 years.

Oh well, a huge lesson learnt here, and hopefully some advice for anyone else out there, thinking of doing the same thing.

I still think the 50:50 beneficial ownership (in the event of a separation,) is a fair arguement. But, I doubt HMRC would ever see it that way.

Oh well......here's hoping the wife don't run off with her new found wealth!