Declaration of trust template

[CaveMan]

Hi,

I need to do one of these to go with a form 17 but haven't a foggiest of what to put in it.

Anyone have a template I can use?

We both own the prope rty 50:50 but I'd like to split the income 99:1

Thanks in advance,

[AndrewDod]

I presume you are married to the other party.

Do it formally - get a solicitor to create the altered deed (about £200). Do not do yourself.

Then submit R17 to HMRC within 30 days. Attach the deed from above.

Bear in mind that the person will then own 99% (if you die, divorce, fight etc).

HMRC is wanting to know that the person actually OWNS 99% - you cannot just randomly allocate to your spouse.

[CaveMan]

Got one now. Thanks.

[TaxationPete]

Is the property jointly owned or tenants in common. Have either of you lived in the property as your PPR.
The chances of the template being right for you are very slim. Find a solicitor that knows what he is doing. Regards Peter

[Lawcruncher]

We often see posters say they want a 99/1% split. Is there some advantage to keeping 1%?

[AndrewDod]

We often see posters say they want a 99/1% split. Is there some advantage to keeping 1%?

Yes, flexibility. It is easier and cheaper to send the asset back in the other direction - needs involve only a modified deed of trust and not involving the land registry or legal title. I suppose the 1% person also has (more) legitimate status as a named landlord and can act in respect of the property in eviction and other processes etc.

[CaveMan]

We're joint tenants.

The form is a template specifically for this scenario. I got it from someone who's used it themselves several times successfully with their existing portfolio. It's a popular misconception that you need a solicitor. I've sent the form to HMRC. Will update the post once I've had a reply from them.

I also have a version that's worded for tenants in common but this wasn't relevant to me. I've kept both for future reference though.

I can reuse the template if I want to change the portions on the future.

[AndrewDod]

Caveman,

Are you really really sure you know what you are doing. I think not.

A form 17 declaration must correctly state the individuals’ ACTUAL beneficial interests (much more than just a stated preference as to proportion of rental split). The whole point of a joint tenancy is that owners have equal and undivided shares. Therefore they cannot hold the property in any other proportion. If they want to hold it in another proportion they have to change the ownership to a tenancy in common. The "reply" that you will get from HMRC is simply an acknowledgment of the election - they will not at this stage examine the validity of the election..... but you will be wide open to challenge. If one of you dies the other with automatically and regardless of any wills inherit the whole and not the stated proportion -- the very antithesis of an unequal splut in beneficial interest.

Form 17 states that you are signing because that "property [is not] held as beneficial joint tenants where you are both jointly entitled to the whole of the property and income" -- no manner of template that you fill in for a joint ownership can undo this. You are also signing that you "you actually own the property in unequal shares" -- which you do not.

Then read the two points above your signature and bear in mind that you are submitting a false declaration to HMRC.

[AndrewDod]

In fact TSEM9850 says it explicitly - so my above assumption as to your erroneous advice is correct:

“A declaration cannot be made where a husband and wife or civil partners own property as beneficial joint tenants. In these circumstances the couple do not own the property in shares at all, but are entitled jointly to the whole of both the property and the income. This is distinct from the situation where the husband and wife or civil partners own property as beneficial tenants in common where they are each entitled to specific shares in the property and the income arising.”

I am no fan of lawyers -- but you need one who knows what she is doing.

[CaveMan]

The declaration of trust I have also mentions the change in type of tenants. Will see if HMRC accept it or not myself.

Like I say I've got it from someone with a large portfolio who has used this several times already with success. Unless something has just changed it should also work for me.

[AndrewDod]

Oh dear. Read my comments, and on HMRC "acceptance". See HMRCs own words on the matter (above).

"Success" defined how? By the fact that the false declaration has not yet been detected?

[jpkeates]

As long as no one dies, divorces or the property remains unsold (or sells at a loss), I'd imagine all will be well.
The moment someone looks at the form is when it'll likely fall apart.

Which means as well as the form being incorrect, every tax return between now and then will be wrong, which sounds expensive to me - multiple penalties, back tax and interest.

I did laugh at "mentions the change in type of tenants"', though.
Nothing like a rock solid "mention", luckily property isn't valuable or anything serious...

[Lawcruncher]

Yes, flexibility. It is easier and cheaper to send the asset back in the other direction - needs involve only a modified deed of trust and not involving the land registry or legal title. I suppose the 1% person also has (more) legitimate status as a named landlord and can act in respect of the property in eviction and other processes etc.

That makes sense, though of course you can still have the position where A and B hold the property in trust for B.

[CaveMan]

When I say mention I don't mean it in the passing sense. It specifically details and references this.

There is no legal requirement for a lawyer to draw up a declaration of trust.

If you have one that matches what a lawyer would write then what's the difference?

[AndrewDod]

I can do little more than reiterate previous postings (and those of others).
There is no legal requirement for a lawyer (albeit that third party independent involvement may be critical to the plausibility of an arrangement) - but your problem is more fundamental.
Your deed of trust template would not match what a lawyer would write, because what you
suggest is not possible. It is based on a fundamental misunderstanding of the nature of joint ownership.