Stamp Duty retrospective claw back by HMRC

peonylover

We bought our house last year and have now received a demand from HMRC for over £8000 stamp duty. At the time were sold an insurance, which had something to do with stamp duty although I'm not sure exactly what, however the insurance company now says they have a clause in their policy re they are not liable if the law changes and it seems that the law has indeed changed. We did everything via a mortgage advisor and a solicitor and thought we were in good hands. We don't have that sort of money hanging around and it's really scary. _pale_ Has this happened to anyone else?

antrobus

peonylover wrote: »

.... _pale_ Has this happened to anyone else?

Very probably.

Now I'm guessing here, but this might be the answer:-

Budget 2012 made clear that the Chancellor of the Exchequer would not hesitate to use retrospective legislation to close down future stamp duty land tax (SDLT) avoidance schemes. Despite the Chancellor’s warning, since Budget 2012, two specific SDLT avoidance schemes, which abuse the transfer of rights (or ‘subsale’) rules, and are used particularly, but not exclusively, for residential properties, have been growing increasingly popular. As a result the Chancellor today announced that legislation would be introduced to close down these schemes and that the new legislation would apply retrospectively to 21 March 2012.

http://www.hmrc.gov.uk/budget2013/sdlt-retrospective-changes.pdf

mrginge

Good on HMRC if you ask me.

(Which you probably don't)

ognum

I am not sure I understand why you did not pay stamp duty at the time. 8k stamp duty equals a house that is well above 250k. Why did you think you didn't have to pay?

foolishboy

Oh dear :-(

http://citywire.co.uk/money/why-avoiding-stamp-duty-is-a-bad-idea/a665733

..I was offered one of these back in Feb before my purchase - as soon as I started drilling down into the nuts and bolts with their salesman they didn't pester me anymore.

I really don't see how you can avoid this (nor should you) - at the very least when I was considering it I was going to keep the required tax for at least 5 years in case HMRC came knocking.

FB

mrsmchapman

Everyone has to pay stamp duty, it the way it is. I suggest you call HMRC and ask how you can pay, whether they will take instalments etc or whether you will need a loan to cover. I've never heard of these insurances for stamp duty but clearly it had to be a con!

RAS

I think this is the function of your insurance OP?

"The promoter fee isn’t your only cost. They will offer you insurance. This does not pay the tax if the scheme fails. It covers the cost of the fees if the scheme fails…but if it does fail it will have cost you £1,000 for the insurance plus the tax charge on top,’ he said."

You are going to need to find the £8K urgently as they apply interest charges (possibly at the statutory 8%).

ognum

Interest is payable on Stamp Duty from 30 days after the transaction so I would think that you are currently accruing interest.

Takeaway_Addict

theartfullodger wrote: »

So you paid someone in an attempt not to pay the tax that everyone else pays?

Why did you believe you deserved special treatment?

As long as its not illegal then nothing wrong in the OP trying to minimise their tax

googler

Why are they asking you for this now? How much did you pay in SD at the time of purchase, and how much did you buy the house for?

antrobus

ognum wrote: »

Interest is payable on Stamp Duty from 30 days after the transaction so I would think that you are currently accruing interest.

Interest on the unpaid tax will accrue from 30 days after the date you completed your purchase (‘the effective date’) until the tax is paid in full

Says the HMRC.

Takeaway_Addict wrote: »

As long as its not illegal then nothing wrong in the OP trying to minimise their tax

There is nothing wrong in trying. Similarly there is no point complaining if it doesn't work.