Garden office as fixtures and fittings?

freda

Would offering £20k for a garden office as a fixture and fitting cause any problems? It has heating, lighting and insulation, and apparently cost £26k a couple of years ago.

I ask because we are trying to find ways to negotiate a price reduction with the house we are buying - our chain broke down and the offer we have received from a new buyer is substantially lower than the one we originally had.

By offering £20k for the office, we will take the price of the property into the lower stamp duty band, thus saving £5k in stamp duty.

Our solicitor seems to think this is OK. I do not want to do anything illegal or underhand, but on the other hand, if there is a legal way to reduce the costs so that we can afford to maintain the chain, I will do it.

Thank you.

Foxy-Stoat_3

If your solicitor, lender, vendor's solicitor and lender thing its all above board then go for it.

An office is not a fixture and fitting though, unless it was a wooden shed than can be moved, ie sold separately on ebay or similar, and taken off the property.

Was the office in the sales documents from the EA?

davidmcn

It doesn't sound particularly moveable, so probably not legitimate. Any transactions at the thresholds are going to attract HMRC's attention, so be prepared to answer awkward questions.

freda

It could, theoretically, be moved from the property, if you dismantled it and took it out through the garage. Its a large wooden building.

In the estate agent's particulars, it was listed as available under separate negotiation, but we just asked for it in with the total price.

Foxy-Stoat_3

If its not on the plan title deeds then maybe able to take something off, although £20K for a secondhand wooden building is a little rich.

A normal lodge cabin retails at £6-7K, plus say £2K for foundations and fitting and £2K for services.

Doubt you will be able to pull this off without bending the truth a bit too much.

davidmcn

freda wrote: »

It could, theoretically, be moved from the property, if you dismantled it

So can many other things included in the price, but it doesn't make them chattels.

Someone else may come up with some helpful case law.

freda

I wonder if I could get him to produce the receipts? I thought £26k for a garden office was a bit steep too, but assumed that was the price of heat, light, foundations, building etc.

mrginge

I think there's a bit of confusion.
If it's treated as a fixture you pay tax on it, if it's a chattel then not.

I guess you're actually asking if it can be classed as the latter.

Although i'd be inclined to trust your solicitor, I would suggest also getting some further guidance from hmrc.

Fwiw it sounds like a fixture, so even classing it as a chattel is pushing it. Declaring it as a 20K chattel has all the hallmarks of a tax dodge and it really should get picked up and at the very least queried by hmrc.

freda

If our solicitor says its ok, does that cover us if HMRC decide to query it?

I quite honestly am trying to avoid paying stamp duty, but only in a legal way!

stator

No, if HMRC decide you owe tax, you owe tax and if a solicitor gave you advice otherwise you would have to sue them for negligence.

£20k seems like quite a lot, if it were resold on the open market I shouldn't think you'd get anything near that, even ignoring the transport reassembly problems.

Is the house price exactly £125k + £20k ?

jjlandlord

Note that in principle a solicitor is not qualified to give you tax advice, that's what a qualified accountant is for.
A qualified accountant would also know the legal tax arguments to back any such arrangement should HMRC query it.