Avoiding stamp duty?

DarrenTMH · 19 January 2011 at 6:20PM

FTBFun wrote: »

It's points like this that get my goat - SDLT mitigation aren't "pre-approved" but rather disclosed to HMRC. There is no approval to their validity.

Bunch of charlatans IMO.

Hi FTBFun

I'd like to apologise for using the term "pre-approved" - it is misleading in a way that I hadn't intended at the time that I said it.

What I should have said instead is something along the lines of in the early days of our schemes being used, when we had done way fewer than the 3,000 odd that have now completed, HMRC did have a flurry of challenging several of our cases - 10 in fact, but sadly for HMRC and happily for the clients concerned, none of these challenges have ever been upheld and none of these or any subsequent clients have been required to pay the SDLT that has been avoided through the use of the schemes. Since these failed challenges HMRC have ceased to challenge any of our cases. One could take this to mean that HMRC are of the opinion that the methods used are legal and legitimate forms of tax planning which there is no point in challenging - which could be deemed as an "approval" of sorts, and when a new case is submitted which has been structured in the same way, because of the previous experiences that led to this "approval" one could view this as a "pre-approval".

However you see it though, HMRC never have and likely never will actually give their approval to any tax planning method as to do so would give the green light to hordes of previously obedient taxpayers to become tax avoiders.

So you are absolutely right and very much entitled to have you goat got by my incorrect use of the term "pre-approved" for which I again apologise.

thanks again

Darren
[STRIKE]charlatan[/STRIKE] apologetic retractor of an incorrectly used phrase

MartinConnolly · 19 March 2011 at 9:45AM

Why can't we just drop all this Stamp Duty rubbish and pay Capital Gains Tax on the profit you make when you sell the house?

scenario A: Man buys propery for £200,000, pays £2,000 stamp duty. Renovates it as his full-time job and sells it for £300,000. Pays no more tax - profit = £98,000, less his expenses. He pays no income tax or NI, yet this has been his 'job'. The buyer then has to pay £6,000 tax (or more accurately ' borrow' it by adding it to the mortgage) even though he's made no gain from it.

scenario B: Man sells property for £100,000 profit and pays Capital Gains tax of about £20,000. Customs and Revenue get more, he pays tax fairly and the buyer isn't left paying interest on the Stamp Duty borrowing for the next 25 years.

Just a thought.

monkeydust_2 · 21 April 2011 at 2:29PM

misspino wrote: »

This thread is obvioiulsy pretty old now but wanted to add my expeience as may be another way of approaching stamp duty and the removal of its sting!

Putting aside the fact that SD is calculated in such an bizarre way - would make so much sense to all to have same model as income tax and pay the rates on each band - one of the toughest things about it is having to then find another lump of cash on top of your deposit.

Things with LTVs are even harder now so we all want to put as much deposit down as possible rather than pay it in tax!

My situation was as a first time buyer, I had managed to scrape together a 10% deposit and having to fork out around £8k for stamp duty on top of this was probably going to mean taking out a short term loan, saving for another year or losing out on the mortgage offer.

I'd been looking at properties under £250k but none were exactly right. I found one for £280k which was the max I could go to with my deposit and mortgage. HOwever, I was stuffed with the stamp duty. To get round this I negotiated with the vendor for HIM to pay my stamp duty. I checked with HMRC and this is totally legal as they dont care WHO pays the stamp duty, as long as it is paid and the property is not undervalued to avoid it. This way, the value of the property was agreed at £280 and my mortgage paid the vendor this. As part of the exchange, he had to agree to pay my stamp duty (our solicitors easily arranged this).

So, I didnt avoid stamp duty being paid but I did avoid having to try and sacrifice part of my deposit (which is the dilemma the buyer is in right at the beginning of this post in 2006!!!!). This wont help you if you just want to avoid paying it on principle but it can help cash flow.

Just my tuppence worth...

Thanks - interesting idea - anyone else done it? Essentially getting the mortgage lender to cover the stamp duty. The only problem might be that the surveyor does not agree with the valuation which will blow this plan out of the water ...