Am I being financially abused by my Father?

MyKatIsPhat

I’ve had a strained relationship with my parents, but in my culture, we always look out for each other. 

In 1994, my dad bought a commercial property with a business partner. Their agreement became strained around 2000, and my dad’s business partner became mentally unstable so my dad bought him out. 

I’m not sure what happened, but my dad asked me to become the co-owner of this property with him. To help, I agreed, but stupidity didn’t ask any questions. I was about 19 at the time. 

Fast forward to today, I work one job where I earn my wage with PAYE, and my second job where I earn a set freelance amount. 

I don’t receive any of the income from the commercial property, it all goes to my dad. 

Because of the partnership I have with my dad in relation to the commercial property, we share the same accountant who files both mine and dad’s tax returns. 

Dad’s accountant (his friend since childhood) insists that I have to claim the shops rental income on my tax returns, despite me not getting a penny. 

When I ask my accountant what share of my self assessment is from my freelance work and what is from the commercial property (so I can pay accordingly) he says it’s 50/50. For transparency, I get 20k from the freelance work, and dad gets about 15k total per year for rental income. 

How can I sort this mess out? Are these guys taking the !!!!!!? TIA

MyKatIsPhat

What I want to add is: if I’m not receiving the income into my account for the commercial property, does it have to go on my tax return?

flaneurs_lobster

So you don't receive any of the rental income? Are you being taxed on the income that you don't receive? 

Presumably it's as much of an offence to declare income that you DON'T receive as it is to not declare income that you do.

Your financial arrangements with your family are for you to work out. Making false declarations to HMRC is never a good idea.  

Mark_d

Perhaps a question for a professional tax accountant.

Whilst you might not be taking an income from this commercial property business, the business is making a profit.  Maybe this profit is being re-invested into business assets or staying as cash, but conceivably tax might be due.

uknick

Have you been doing tax returns since 1994?  If so, why has the rental income question only just arisen?  Or, was it always there but you've only just become aware of it?

kazwookie

Change your accountant asap, to one that has no connection with any member of your family.

Do your own returns, get the new accountant to check them.

False HMRC return Summary conviction for evaded income tax carries a six-month prison sentence and a fine up to £5,000. More serious cases of income tax evasion can result in a sentence of up to seven years imprisonment. Sentences can be increased, and an unlimited fine imposed, if the taxpayer fails to repay the evaded tax. https://www.greenaccountancy.com/hmrc-penalties-for-inaccuracies/

The current accountant is making the return on your behalf, for which you have authorised them to do, but it is false, you are the one who is gonig to be in trouble.

If this is a limited business to can look it up https://www.gov.uk/get-information-about-a-company  it will show facts about the business etc.

I suggest sitting down with your father and explaining what you are unhappy about and what you are going to do about it/ what you want.  If you cannot do this because it is a cultural thing, then you have to put up with it.

Also get YOUR paperwork in order, and make sure it is safe, and doesn't go 'missing' ie get it scanned and in an icloud of some sort.

I've been there, got the tshirt etc, took the hit from HMRC with the penality, now I do it all myself and get an accountant to check it before I submit it.

sheramber

MyKatIsPhat said:

I’ve had a strained relationship with my parents, but in my culture, we always look out for each other. 

In 1994, my dad bought a commercial property with a business partner. Their agreement became strained around 2000, and my dad’s business partner became mentally unstable so my dad bought him out. 

I’m not sure what happened, but my dad asked me to become the co-owner of this property with him. To help, I agreed, but stupidity didn’t ask any questions. I was about 19 at the time. 

Fast forward to today, I work one job where I earn my wage with PAYE, and my second job where I earn a set freelance amount. 

I don’t receive any of the income from the commercial property, it all goes to my dad. 

Because of the partnership I have with my dad in relation to the commercial property, we share the same accountant who files both mine and dad’s tax returns. 

Dad’s accountant (his friend since childhood) insists that I have to claim the shops rental income on my tax returns, despite me not getting a penny. 

When I ask my accountant what share of my self assessment is from my freelance work and what is from the commercial property (so I can pay accordingly) he says it’s 50/50. For transparency, I get 20k from the freelance work, and dad gets about 15k total per year for rental income. 

How can I sort this mess out? Are these guys taking the !!!!!!? TIA

You  have to ask the accountant how much your freelance work is.

Why are you not keeping your own records of your freelance income and expenses?

Is your freelance work connected to the commercial business or the premises?

It would be better if you kept your tax affairs separate from your father!s and either do your own tax returns or use a separate accountant.

GDB2222

What is your father doing with the £15k income from the property that you are paying tax on? Is he saving it up and investing it for you?

I wonder whether this is an arrangement that made sense (in terms of saving tax) when you were 19, and had no other income, but has outlived its usefulness?

Grumpy_chap

GDB2222 said:

What is your father doing with the £15k income from the property that you are paying tax on? Is he saving it up and investing it for you?

I wonder whether this is an arrangement that made sense (in terms of saving tax) when you were 19, and had no other income, but has outlived its usefulness?

AIUI, such an arrangement would not work in terms of saving tax if you are suggesting something along the lines of father being higher rate tax payer and OP being below PA threshold or lower rate so declaring the income as split for tax purposes even though it is not split in reality.  The reason that would not work is the dishonesty / fraud aspect of it.  

There are other complications here - the OP is a part owner of this property but has no involvement with it but that does not mean there are no considerations that may affect the OP:

• liability in the event of an accident / unsafe property
• CGT liability
• impact to purchase of own property
• asset considered in the event of means tested benefits claim
• possible claim to the property by ex-partner

I do not think the OP has shared enough for an assessment of the above consideration to be made and whether they are material concerns in this case.

Bookworm105

- OP is legal (co)owner of a property generating a rental income 
- OP does not physically receive any cash from that rent 

a) is OP the beneficial owner of the property in the first place? If not, then he has no tax liability for the income since he has zero share of it (there is a crucial difference between legal and beneficial ownership)
b) there is an implication the accountant is recording a share of the income in OP's tax return (beneficial ownership) so OP is paying tax on income he does not get in physical cash from which to pay the tax. If beneficial ownership exists then that is the correct info on a tax return. 
c) we have no idea what, if anything, the father is doing with the retained cash.
d) if there is no beneficial ownership then there is zero CGT liability on the OP 

The core of this thread is clearly a family dispute situation regarding movement of actual money to OP and can only be resolved as such 

Sarahspangles

MyKatIsPhat said:

Dad’s accountant (his friend since childhood) insists that I have to claim the shops rental income on my tax returns, despite me not getting a penny. 

When I ask my accountant what share of my self assessment is from my freelance work and what is from the commercial property (so I can pay accordingly) he says it’s 50/50. For transparency, I get 20k from the freelance work, and dad gets about 15k total per year for rental income. 

How can I sort this mess out? Are these guys taking the !!!!!!? TIA

Do you pay the accountant? You could appoint your own.