Avoiding Stamp Duty.. anyone know about this...

dfarry

In my search for a solicitor/conveyancer, one company I have exchanged emails with has sent me this....

As you are in the 3% bracket for Stamp duty, should you wish to instruct us, we can also offer to try reduce you stamp duty by 50%.

The tax planning is defined as the utilisation or exploitation of legal 'loopholes or provisions' within the tax legislation to reduce level of tax.

In excess of 1,000 cases have been successfully completed.

Should you be interested in the SDLT planning, I would need for Mr xxxxxxxxx (QC) to give you a call to explain tax planning in further detail.

Mr xxxxxxxxxxx operates on a no win, no fee basis, should the case be won you would not pay any stamp duty, but he would take fee of 1.5% of your stamp duty + VAT.

Should the case be lost all it would mean is that you pay the stamp duty as normal.

It’s a no lose situation. The Labour government actually used this scheme in 2006 on their sale of their HQ and saved £210,000 of stamp duty

It sounds too good to be true but is there any truth in these statements and does anyone know the details of how it works.

Pee

Have you tried googling the barrister? You should get a website for his chambers, and a phone number, call that and check that it seems legit.

No, I haven't heard of it, but that doesn't mean it doesn't exist.

SDLT planning sounds legal, whereas I am sure you know avoidance is illegal.

I think what you want to know is that this QC is a QC and is regulated by the bar.

dfarry

I have tried a couple of barrister/solicitor searches but I can't find the name anywhere... perhaps I am looking in the wrong places though.

00ec25

dfarry wrote: »

I have tried a couple of barrister/solicitor searches but I can't find the name anywhere... perhaps I am looking in the wrong places though.

:rotfl:
try again!
if they are not listed with the Bar Council they are to be avoided as they are not barristers!
http://www.barcouncil.org.uk/about/find-a-barrister/

if they are really a solicitor (very unlikely as they style themselves a QC) then the same applies via the Law Society
http://www.lawsociety.org.uk/choosingandusing/findasolicitor.law

dfarry

00ec25 wrote: »

:rotfl:
try again!
if they are not listed with the Bar Council they are to be avoided as they are not barristers!
http://www.barcouncil.org.uk/about/find-a-barrister/

I tried there and couldn't find them... so yes I think I will avoid!

p00hsticks

dfarry wrote: »

It sounds too good to be true but is there any truth in these statements and does anyone know the details of how it works.

It could be the old chestnut where if you are buying a house priced not far above a SDLT threshold (250,000 for the 3% band) then you re-negotiate the price to be so much for the house and so much for 'fixtures and fittings' (carpets and curtains etc). So instead of buying a house for £260,000, on which you'd have to pay 3% SDLT (£7,800), you instead agree with the seller to pay £250,000 for the house and £10,000 for the 'fixtures and fittings'. The Seller gets the same but you now only pay 1% SDLT on £250,000, which is £2,500 - so you potential avoid paying £5,300 in tax.

If it is this, then there are two main drawbacks I'm aware of;

Firstly HMRC are understandably VERY suspicious of such transactions and are likely to examine it with a fine toothcomb, so you need to be able to show that what you are paying for F&F is a justifiable figure - you can't agree to pay £25,000 for a pair of motheaten old curtains !

Secondly, if you are getting a mortgage, then the mortgage company are very unlikely to lend the price of the F&F - just what you've agree to pay for the property itself. If you are borrowing a large proportion of the price, then you may struggle to get as good a mortgage as the LTV (loan to value) figure will be higher. You'll also have to find the cash to pay for the F&F from somewhere. So what you save in SDLT you could end up paying in increased mortgage charges or fees.

There appear to be a couple of anomolies in the e-mail. Firstly, they talk about you being in the 3% band and reducing your SDLT by 50% - but (assuming the approach is as I've described) then next band down is 1%, which would be a 2/3rd reduction.

Secondly they state that " should the case be won you would not pay any stamp duty, but he would take fee of 1.5% of your stamp duty + VAT.". Not only does this contradict their opening statement that they will reduce your SDLT by 50%, if they are saying that you will end up paying none then by calculating their fee based on what you are paying they will end up with nothing themselves ! I suggest you get them to clarify this.

G_M

I would also be tempted to forward the email to [EMAIL="Ethics@BarCouncil.org.uk"]Ethics@BarCouncil.org.uk[/EMAIL] or contact the bar council .

p00hsticks

Actually, having researched the example they quote about Labour HQ, it looks like something that wouldn't easily work for private residences.

The method there appeared to be to make the property a company asset, and then sell the company rather than the property. I'm no expert, but I susepct if you did this with a residential property then the seller could lose the right to the Capital Gains Tax exemption available to PPRs.

Are you buying or selling ?

http://www.independent.co.uk/news/uk/politics/labours-tax-dodge-on-sale-of-hq-saved-163210000-stamp-duty-427849.html

Charlton_Taz

Pee wrote: »

SDLT planning sounds legal, whereas I am sure you know avoidance is illegal.

Going to be pedantic here (sorry ) but tax avoidance is perfectly legal, tax evasion is what is illegal.

In this situation if your lawyer rightly suggested that you could get your house sale price under the £250K limit by allocating a justifiable (i.e. legitimate) amount to fixture and fittings then that would be tax avoidance and that is fine. However, if they are suggesting you need to allocate a value to fixtures and fittings that is ultimately unjustifiable than that would be tax evasion and ofcourse you should not be doing that!

dfarry

p00hsticks wrote: »

Actually, having researched the example they quote about Labour HQ, it looks like something that wouldn't easily work for private residences.

The method there appeared to be to make the property a company asset, and then sell the company rather than the property. I'm no expert, but I susepct if you did this with a residential property then the seller could lose the right to the Capital Gains Tax exemption available to PPRs.

Are you buying or selling ?

http://www.independent.co.uk/news/uk/politics/labours-tax-dodge-on-sale-of-hq-saved-163210000-stamp-duty-427849.html

Thanks for doing the investigating.... as I understand it, if you end up not paying any stamp duty.... due to this loophole then they will charge an additional 1.5% fee + vat of the original stamp duty amount.... so you end up paying just over half the original stamp duty..... clearly not a bad little earner for a solicitor. It all sounds a bit risky to me and I can't be doing with having HMRC chasing after me for thousands of pounds of unpaid tax.

zzzLazyDaisy

If the barrister is a QC you should be able to find him by googling his name! There aren't that many QC's and they are the top of their field.

Frankly I think the process of buying a house is stressful enough without introducing complications (and probably inevitable delays as well)

If it really was that easy, everyone would be doing it.... and... you wouldn't need a QC to sort it out for you!