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Advice Needed On Dodging Stamp Duty
Comments
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If he agrees a price of £178k then the stuff only has to be worth £3k. Which is quite easily done.
That wouldn't help him at all though - it's the new £175 stamp duty threshold that's the issue here....much enquiry having been made concerning a gentleman, who had quitted a company where Johnson was, and no information being obtained; at last Johnson observed, that 'he did not care to speak ill of any man behind his back, but he believed the gentleman was an attorney'.0 -
I think you miusunderstood NDG. Agree a total price of £178k, to include £3k for carpets and curtains etc, to be sold separately.
On valuation, secondhand carpets and curtains are barely worth anything. However, to someone buying a house that those items fit, they are worth a fair bit. Any idea of the precise basis for valuation to be used?No reliance should be placed on the above! Absolutely none, do you hear?0 -
Went to view a property today, in conversation with the agent I asked about this practice happening say you do a deal at 175 but put the balance in an envelope etc. She said it is going to happen big time and already is, and did when duty was over 250k. You need it to be between you and the vendor obviously. If a solicitor gets wind of it they should report it, if the agent hears about it they will turn a blind eye as not obliged to report it. So go for it I say, then the 2 or 3 k saved will go towards a kitchen bathroom 3 pce suite or whatever and that helps the high street sales and everybody is happy. Except the tax man of course, but who cares.
I came in to this world with nothing and I've still got most of it left. :rolleyes:0 -
I think you miusunderstood NDG. Agree a total price of £178k, to include £3k for carpets and curtains etc, to be sold separately.
On valuation, secondhand carpets and curtains are barely worth anything. However, to someone buying a house that those items fit, they are worth a fair bit. Any idea of the precise basis for valuation to be used?
You are right, I did misunderstand.
I think it's the second-hand value, rather than the "it fits" value, but I'm not certain at all....much enquiry having been made concerning a gentleman, who had quitted a company where Johnson was, and no information being obtained; at last Johnson observed, that 'he did not care to speak ill of any man behind his back, but he believed the gentleman was an attorney'.0 -
The following link is slightly helpful, although it does not say anything about the basis for valuation of chattels. In practice, I cannot see that HMRC will bother to interfere in a transaction concerning chattels unless it's clearly unreasonable. Chattels are exempt from Stamp Duty.
If it would cost me £3k to have carpets fitted and I pay you £2k for the existing carpets that would not seem wildly unreasonable to me - it's obviously much more than the carpets would be worth if removed from the property, but I'm not convinced it makes it a part of the land transaction. Carpets lose nearly all their resale value as soon as they are fitted to the property, as the cost of adaapting them to another property makes this uneconomic. The valuation issue is not as significant for white goods, say.
If I pay you £25k for the carpets, say, that's obviously an attempt at evading SDLT, and I would expect the Revenue to come down very hard.
http://www.hmrc.gov.uk/manuals/sdltmanual/sdltm04010.htm
The following items are, however, confirmed as being assets that will normally be regarded as chattels- <LI class=filledcircle>carpets (fitted or otherwise) <LI class=filledcircle>curtains and blinds <LI class=filledcircle>free standing furniture <LI class=filledcircle>kitchen white goods <LI class=filledcircle>electric and gas fires (provided that they can be removed by disconnection from the power supply without causing damage to the property)
- light shades and fittings (unless recessed)
- <LI class=filledcircle>fitted kitchen units, cupboards and sinks <LI class=filledcircle>agas and wall mounted ovens <LI class=filledcircle>fitted bathroom sanitary ware <LI class=filledcircle>central heating systems
- intruder alarm systems
A deduction would, however, be appropriate for amounts properly apportioned to any plants growing in pots or containers.No reliance should be placed on the above! Absolutely none, do you hear?0 -
Dear me the dogooders on this thread and the moral crusaders are laughable.
The guy is asking for tax avoidance not tax evasion. One is legal the others are not.
As has been said you can sell extras outside of the stamp duty regime. So if you can buy his Fridge, table, shed etc and use that to bridge the gap then you should be fine. Perfectly legal and not dodgy. However try to say you bought a shed for £6000 probably is dodgy.
I'm not a do-gooder or a moral crusader.
Why put yourself in a situation where:
1. The seller can screw with you, or
2. The tax man can make your life hell?
Buying, selling and moving is stressful enough as it is without this.I'm not cynical I'm realistic
(If a link I give opens pop ups I won't know I don't use windows)0 -
If the chance is there and you are not taking the pi55 I say go for it. We are taxed to the hilt in this country as it is 24/ 7. Payback time I think.I came in to this world with nothing and I've still got most of it left. :rolleyes:0
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I was interested in the valuation issue. My researches show that:
a) It's perfectly ok to apportion part of the house value to 'chattels' such as carpets and curtains. The fact that these are often bundled in with the house sale does not mean that they are part of the land, and their value should be disregarded for calculating stamp duty.
(Reference: http://www.hmrc.gov.uk/manuals/sdltm...sdltm04010.htm)
b) The value that should be placed on the carpets is their market value, taking into account their secondhand condition. However, and this is crucial, it is reasonable to take into account that there is a special purchaser for the carpets and curtains, namely the person buying the house. So, you can disregard the fact that secondhand carpets taken out of the property generally have no value. Somebody buying the house will value the fact that the carpets and curtains have been bought/made/cut to fit the house.
(Reference: http://www.voa.gov.uk/instructions/chapters/inheritance_tax_ch_1b/sections/section_7/frame.htm)
The two references I have given are from the Revenue's own websites, so I don't think there's anything chancy about this. As an example, some carpets that cost £3k a couple of years ago might easily be worth £2k or £2.5k to someone purchasing the house. That would depend on their condition, of course.
Clearly, handing over wodges of cash in brown envelopes in order to defraud the Revenue of Stamp Duty is criminal. I agree with Olly that would be pretty stressful, as well as being wrong. Legitimately attributing a part of the purchase price to carpets, curtains etc, seems to me just to be sensible. In practice, if you have a reasonable basis for the valuation, the Revenue are not going to challenge it.No reliance should be placed on the above! Absolutely none, do you hear?0 -
I'm not a do-gooder or a moral crusader.
Why put yourself in a situation where:
1. The seller can screw with you, or
2. The tax man can make your life hell?
Buying, selling and moving is stressful enough as it is without this.
As I said, if you are dishonest then yes I agree with you, but buying Chattels as part of a house purchase is not illegal or dishonest. They go on the contract along with the house price and the money is passed through the solicitors. Theres no way the seller can mess with you and as long as your not taking the mickey with the cost of the items the tax man can't do anything about it either.
Either dogooders or moral cruseders or just not understanding.
If you can save £1750 then do it, ignore the numptys on here claiming your fiddling the tax man as there are legals way to do it as has been said already many times. Of you feel guilty then just remember all the doogooders will be paying the tax so it s not like the taxman doesn't get anything.
Why is it the internet, especailly forums seem to bring out these moral crusaders. Very strange.0
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