Estate agents suggesting tax evasion?

jingies

I've just had an interesting conversation with an estate agent (who shall remain nameless for now).

I've seen a house in a popular area advertised at a "fixed price, £250000"

This is clearly for stamp duty reasons, however the agent told me that as the house was in a very popular area and would clearly sell very quickly (from what I have seen recently, this is likely to actually be true) they were expecting offers of £250000 with additional "cash on completion" that would not attract stamp duty.

[edit to add additional details]

I should also mention that the listing on a popular property listing site includes the phrase:
"NB.
Pursuant to the Estate Agents Act 1979, we hereby declare this property is owned by an employee of [REDACTED] Estate Agency. "
which makes it all seem a bit more dodgy.

[end of edit]

My questions:
Is this legal? (I think not)

If it is legal, how would this be arranged with solicitors etc?

If it is illegal, should I report this? If so, who to?

G_M

jingies wrote: »

I've just had an interesting conversation with an estate agent (who shall remain nameless for now).

I've seen a house in a popular area advertised at a "fixed price, £250000"

This is clearly for stamp duty reasons, however the agent told me that as the house was in a very popular area and would clearly sell very quickly (from what I have seen recently, this is likely to actually be true) they were expecting offers of £250000 with additional "cash on completion" that would not attract stamp duty.

My questions:
Is this legal? (I think not) illegal

If it is legal, how would this be arranged with solicitors etc? no solicitor would risk their career arranging this

If it is illegal, should I report this? If so, who to?

HMRC?

http://www.hmrc.gov.uk/reportingfraud/online.htm

jingies

Glad someone agrees with my instinct.

We'll view the house, and if we think it's worth it we'll make a genuine offer.

If we win, we win but we'll do it all above board; I don't want the worry of HMRC coming back in the future.

If someone else is prepared to make these deals, c'est la vie, that's their choice.

pjcox2005

Not illegal but it doesn't work.

Stamp duty land tax would be payable on the full amount, normally at the original acquisition date even if part of the payment was deferred or dependent on future events.

If they don't report/pay the stamp duty on the full amount then that would be deliberate tax evasion and illegal/reportable.

Better_Days

Also be careful if the agent suggests that you pay extra for fixtures and fittings (chattels per HMRC) Recently an EA suggested to me repeatedly that I pay between £10k to £15k F&F on a property marketed OIEO £250K. An absolutely ridiculous amount for second hand carpet, curtains and light fittings in this particular property (and I suspect most marketed in this price bracket)

Any F&F that you agree to pay for must be at the second hand value and qualify under HMRC rules. HMRC are tightening up on this, so if you do go down this route, err on the side of caution. It is the buyer who takes all the risk in these arrangements and HMRC have 9 months to review the transaction by which time the EA will be long gone. There are a number of threads on this topic.

phoebe1989seb

I've posted this before, but we once knew someone who sold for £250k and their buyers slipped them a further amount in cash (£10k IIRC)

AFAIK the EA and sols involved were unaware of this transaction and the *sold* price was believed to be £250k, which was recorded at the Land Registry etc.......we lost touch with the vendors concerned but to my knowledge they/their buyers got away with it, I suppose because there was no record of it whatsoever.

I'm certainly not condoning this btw, but just wanted to say there are definitely unscrupulous people out there who will do these things if they can find a loophole :mad:

paddy's_mum

I can never understand why the vendor wants to do this as it is fraught with hazard for them.

Imagine this scenario..

The sale has completed, everyone's moved, the paperwork is done, dusted and submitted to the proper authorities. Along comes the vendor saying (nudge,nudge,wink,wink) "Right, I'll take the extra £10 now ... "

"What money is that then, Fred ... what agreement? I said no such thing ...."

Is the vendor really going to take the purchaser to court? The mind boggles -

No, honestly Your Honour, we had an agreement to defraud the tax people....:eek:

Better_Days

I agree paddy's mum. I also think there is more chance of the buyer pulling out, even at a late stage, when they fully realise the risk they are taking attempting to avoid SDLT.

kingstreet

I suspect this will evolve in time into a suggestion that "fixtures and fittings" are purchased separately, rather than an under the table payment.

theartfullodger

Walk away & only deal with honest decent people.

Grass these crooks up to HMRC &/or Police as you wish.

tim123456789

jingies wrote: »

My questions:
Is this legal? (I think not)

If it is legal, how would this be arranged with solicitors etc?

If it is illegal, should I report this? If so, who to?

1) not if it's done with the intent to avoid paying SDLT.

2) If done with the intent to avoid SDLT, it wont be. So as there is no enforceable contract for this second payment the buyer doesn't have to pay it as there's nothing the seller can do to force him.

3) HMRC (if you are sure that it actually happened)