Estate agents suggesting tax evasion?

Hailstorm

paddy's_mum wrote: »

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:

Exactly, the vendor would have no case against the buyer for the extra money.

If anything, the buyer would have a potential case against the vendor for harassment. The buyer could say "we have this legally binding contract which the vendor signed stating the purchase price was £250k and now he is demanding more money".

The fixtures and fittings thing is dodgy but not illegal. Say for example you pay another £10k for fixtures and fittings. If the HMRC decide to investigate they will look at what comparable fixtures and fittings are worth on the second hand market. If they conclude they are only worth £5K then they will record the sale as £5k for fixtures & fittings and £255k for the house, meaning another £5k+ will be owed in stamp duty.

Better_Days

Hailstorm wrote: »

The fixtures and fittings thing is dodgy but not illegal. Say for example you pay another £10k for fixtures and fittings. If the HMRC decide to investigate they will look at what comparable fixtures and fittings are worth on the second hand market. If they conclude they are only worth £5K then they will record the sale as £5k for fixtures & fittings and £255k for the house, meaning another £5k+ will be owed in stamp duty.

There is a bit more to it than this. HMRC risk assess cases they consider investigating. £10k F&F on a £250k purchase will be high risk and therefore much more likely to be investigated than say £1k F&F. Not only will the buyer be charged the extra stamp duty, but interest on the tax paid late and a penalty up to 100% of the extra tax due. Plus HMRC can and do successfully take cases such as this to court. Google Orsman v HMRC (2012). Don't forget it is not only the second hand value that HMRC will investigate, but also whether the F&F qualify for SDLT exemption under HMRC rules.