In Alison Moss v HMRC [2025] TC09535, the First Tier Tribunal (FTT) found that an individual was solely taxable on income from a property owned jointly between her, and her estranged husband. The former husband was not in receipt of, or entitled to, the income.
In October 2013, Ms Moss and her former husband (FH) purchased a property, jointly, in Dunblane.
- In February 2015, FH went abroad to Bangkok on business, executing a power of attorney in Ms Moss’s favour before he left.
- During 2016, communications between Ms Moss and FH became erratic, ceasing completely in November 2016. At that time, Ms Moss considered their marriage over.
- Before FH left, a loan was taken out to purchase 90 solar panels for the property. FH sold 60 of the panels, but did not discharge any of the related loan.
- Ms Moss let the property out between February 2017 and March 2020 to help make ends meet. Rental income was paid into a separate bank account to ensure FH could not access the income.
- When rental commenced, Ms Moss had no idea whether FH was still alive, let alone where he was or what he was doing. It was only in 2018 that, through solicitors, there was confirmation that he was still alive.
- In December 2022, HMRC started to check Ms Moss’s sources of income. Discovery assessments totalling £10,749 were raised for 2017-18 to 2019-20 in October 2023, taxing Ms Moss on the rental income received from the property.
- Ms Moss Appealed, arguing her liability should be reduced by 50% on the basis that she was acting under a power of attorney, and half of the assessment was attributable to FH.
- Ms Moss also argued that the solar panel loan repayments should be included as a revenue expense.
- HMRC upheld their decision during a Statutory review. Ms Moss appealed to the First Tier Tribunal (FTT).
Under s.271 ITTOIA 2005, the person who is liable to tax on the profits of a property rental business is the person receiving or entitled to those profits.
The FTT found that:
- Although the property was jointly owned by Ms Moss and FH, the rule that deems income to Arise equally between spouses did not apply, as the couple were not treated as living together.
- Ms Moss and FH had separated in circumstances which were likely to be permanent, with effect from November 2016.
- On the facts, the Furnished Holiday Letting exclusion also applied, meaning an automatic 50:50 division of profits did not apply.
- Ms Moss was the one actually carrying on the business. As such, she was liable to tax as the person who received or was entitled to the business profits.
- There was no evidence whatsoever that the letting business was carried on by anyone other than Ms Moss.
- Although FH knew Ms Moss was letting out the property, this did not mean that he was carrying on that business with her.
- The power of attorney simply allowed Ms Moss to exploit the property in a number of ways, including letting. It did not mean FH was carrying on a business with Ms Moss.
- Simply because FH benefited from the use to which the income was put (paying off debts for which he was jointly liable) did not mean he was entitled to a half share of that income.
- No deduction was allowed for the loan repayments which related to acquiring the solar panels.
- There was insufficient information to allow any expenditure as a Pre-trading expense.
- The FTT did not know whether the repayments were Capital or revenue as no evidence was provided.
The appeal was dismissed.
Useful guides on this topic
Joint property: Legal v beneficial ownership
What is the difference between legal and beneficial ownership? What are the tax consequences? Are the rules different for married couples and civil partners?
Land & Property: an Adviser's Tax Update 2025-26
Land and Property taxes: a comprehensive review of the sector offering a topical CPD update. Hot topics for advisers include issues concerning the abolition of the Furnished Holiday Let (FHL) regime and the recent Spring Statement 2025 announcement that MTD for landlords with income above £20,000 will be brought forward to April 2028.
Property profits & losses: Toolkit (2025-26)
Our Property Profits & Losses toolkit takes HMRC's version as its starting point and adds a great deal more information about what you can claim as an individual landlord.
External link