Stamp duty - is this allowed?

holly_hobby

Too many wine gums .....

neverdespairgirl

Mrs_SCW wrote: »

Hi guys
We are looking to buy a property and have seen one that we like. We would like to make an offer for 265,000.
As stamp duty increases beyond 250,000 I was wondering if we could offer 250,000 for the house and 15,000 for the fittings (eg carpets, curtains, fitted appliances) to avoid the extra stamp duty.

Has anyone ever heard of / or done similar?

the Inland Revenue have most certainly heard of it, and therefore they tend to pay very close attention to such arrangements, where they are near the stamp duty threshold.

You'd need to show that there were actually £15k worth of fittings, more or less - so unless the house has seriously expensive antique and designer gear, it's not that likely.

Senior_Paper_Monitor

Sorry to be a pedant here (and not trying to 'score points' - other than taking advantage of the rare opportunity to correct Holly !!) but it is a very important point to help forum readers understand the weakness of this often 'bar room lawyer' recommended gambit.

.... "You'd need to show that there were actually £15k worth of fittings"

'Fixtures and fittings' don't count (antique or not) - 'chattels' can count.

MacMickster

neverdespairgirl wrote: »

the Inland Revenue have most certainly heard of it, and therefore they tend to pay very close attention to such arrangements, where they are near the stamp duty threshold.

You'd need to show that there were actually £15k worth of fittings, more or less - so unless the house has seriously expensive antique and designer gear, it's not that likely.

You also need to be aware that it is only the market (second-hand) value of the chattels which would be allowed - not the price when new or any other value that you want to use.

The vendor may, for example, have paid a large amount several years ago for made to measure curtains throughout the property. If they tried to sell them now second-hand on the open market (ebay, classified ads, car boot sale etc) their current value would be very little. Likewise with the carpets etc.

HMRC are well aware that people try to inflate the value of such items to evade stamp duty and will challenge such valuations. I believe that where they find that people deliberately understate the true purchase price of a property in this way then they can charge significant penalties in addition to the underpaid stamp duty.

Nins12345

How much is the property on the market for how long and have they had offers? All to be taken into consideration

zzzLazyDaisy

Put simply - it is a nice idea, used to be popular, and the revenue got wise to it and plugged the loophole. If you buy fittings your solicitor has to send a list to HMRC detailing the item, the new price, and the agreed used price. Any purchase around the SD limit is scrutinised carefully.

But the seller is marketing a property just above the 1% SD level in the knowledge that buyers are not going to want to pay the extra SD, and therefore will make an offer below £250k, so make an offer and forget shennanigins... it isn't worth the hassle.

Edit: have a look at the Orsman case, here...

http://www.accountingweb.co.uk/article/orsman-decision-limits-chattels-claim/527615

Mrs_SCW

Thanks for all your advice, much appreciated. It was just an idea but I realise now it probably isn't worth the hassle.
For those who have asked, the property is on the market for 284,000 and I think it is worth around 265,000. I might consider offering 250,00 but I think this will be flat out rejected!

holly_hobby

Senior_Paper_Monitor wrote: »

Sorry to be a pedant here (and not trying to 'score points' - other than taking advantage of the rare opportunity to correct Holly !!)

Ah ... to be fair SPM, it was a gen digit mis-type, rather than my completely loosing the plot ... or talking out of my sombrero ... .... (although yes, my friends have known both after we've been out on tiles for a few cheeky cosmopolitan's :j :rotfl: )

But it was very important to amend .... which I've done ... (am I off the hook ?? )

Just wanted to say a quick hi to NeverDespairGirl - who I haven't seen on the Mge forum for ages ...nice to see you back x

Anyhoo .... I digress .. back to the plot ....

Yes SPM I think that reference to F&F earlier in the post may have thrown a few peeps, or they may actually mean non-fixed items and have (albeit it is technically incorrect), just used F&F as a turn of phrase.

I think the OP now understands whats a permissible extra purchase, and the issues in the proposition they planned to present to the Vendor. And that even if the Vendor were agreeable to become involved, the actual mechanics of successfully pulling off 15k of used chattels with HMRC, will be some feat of skill ....

Now I don't say it would be completely unachieveable ... BUT OP would you want HMRC challenging and refusing the additional costs, with the fallout of you having to withdraw from the purchase, loosing your exchange deposit and all conveyencing costs and mge costs into the bargain .. ?

Anyways, here you have the opinions of others .... please think carefully about the issues raised.

Hope this helps

Holly x

Bridge72

I would maybe avoid using any schemes that reduce your stamp duty land tax.

In his 2012 Budget Speech Chancellor George Osborne said that government and the revenue are going to crackdown on SDLT avoidance, as well as tax evasion, avoidance and fraud.

The General Anti Avoidance Rule (GAAR) when it comes into play will affect SDLT also.

Avoid using SDLT schemes and then you will also avoid a possible investigation by the taxman!