Stamp Duty - can this be done?

murphydog999

If an offer is made on a house of £265,000 - which is a fair chunk off the asking price - can the purchaser then offer £250K + £15K cash (probably as a private arrangement?) to get down to the 1% threshhold? The saving would be £5450 in stamp duty.

Many thanks.

USM

murphydog999 wrote: »

If an offer is made on a house of £265,000 - which is a fair chunk off the asking price - can the purchaser then offer £250K + £15K cash (probably as a private arrangement?) to get down to the 1% threshhold? The saving would be £5450 in stamp duty.

Many thanks.

Of course - but HMRC spend a lot of time looking at deals involving cash just around the stamp duty threshold so expect to get caught.

Thefunkygibbons

Also I am sure your solicitor would have a fit, as they have to declare that the transaction is not part of a sub-divided transaction designed to avoid tax

zzzLazyDaisy

It is fraud.

Why would the seller agree to aid and abet you in the fraud, with no guarantee that you would actually cough up the extra cash (the agreement for the top up would of course be unenforeceable, since it is a criminal act).

Even the wheeze of allocating the extra to purchase of fittings (carpets, furniture, etc) doesn't often work these days, as the revenue has made it so difficult by demanding original receipts for the goods, so they can calculate the legitimate second hand value, which is probably..... erm... nothing like the top-up figure, designed to avoid the stamp duty.

I'm afraid stamp duty is one of the nasty realities of buying a house.

somethingcorporate

Reduce your offer to £250k or walk. Any seller within £20-30k of the threshold should expect it.

googler

Read the HMRC rules - SD is payable on the full 'consideration' that changes hands for the house.

Your consideration is the sum of the two amounts, not what you offer, since you're obviously handing over the total for the property as two linked transactions.

MacMickster

Lets think. For bog standard property sales, the greatest risk of significant evasion of stamp duty would be where? That's right - by manipulating transactions around the banding thresholds.

I'm no expert but I suspect that someone at HMRC may have figured this out. I'd guess that they won't look in detail at every such transaction, but would look into a significant percentage and impose large enough fines for such fraud to act as a deterrent to the remainder.

On the other hand OP, maybe you are the first to think of this complex and innovative scheme to defraud the the taxman, so it hasn't yet occurred to anyone at HMRC. What do you think?

murphydog999

Ok Ok I get the picture. It's not me suggesting it before anyone thinks I'm the scourge of the earth.

Thanks for the replies.

somethingcorporate

You won't be the last to suggest it so don't take the responses personally!

Caveat_Mortgagor

I know someone who tried to do such a deal 30 years ago, selling to a family member.

The bag of cash never materialised.

Family feud - yes.

A paper trail to support a court case - No!

robmiller667

The answer is to talk to your solicitor as they will be able to advise what you can reasonably offer for fixtures and fittings. If the house you are buying has new carpets, newly purchased appliances, etc etc then there is some room for reducing the asking price but its a grey area and as others have pointed out, HMRC might take a close look at the transaction.