Buying items

mrginge

davidmcn wrote: »

No, because you're not declaring the gross consideration, just the net price on which the SDLT is to be calculated.

They got suspicious (not sure why, other than the £250k declared consideration) and made enquiries afterwards. Case report here.

2. In March 2010 Miss Orsman bought a house together with certain chattels for a total of £258,000. Of that amount £8,000 was described as being for "Chattels"

Where would this have been described?

davidmcn

mrginge wrote: »

2. In March 2010 Miss Orsman bought a house together with certain chattels for a total of £258,000. Of that amount £8,000 was described as being for "Chattels"

Where would this have been described?

In the contract between her and the vendor - see paras 17/18.

mrginge

davidmcn wrote: »

In the contract between her and the vendor - see paras 17/18.

I understand this.
Do hmrc see this contact as part of the sdlt submission?
If not how did they get the 'list' referred to in para 24?
If the list was provided after the initial query, what event or information prompted them to investigate in the first place?

Clearly there solicitor had been told about this 8k, so again are you suggesting that the buyers should have not done this and kept it all off the record?

It doesn't seem logical that hmrc ask you for a net consideration but have no indication from any source on what the total consideration is. Surely they don't just take a finger-in-the-air approach to decide which transactions need investigating?
If so, would it make more sense to pay for example 20k for chattels on a 255k purchase and simply declare a net consideration of 235k to keep it well under hmrc's radar?
There simply *has* to be some mechanism that would flag that up to hmrc.

davidmcn

mrginge wrote: »

Do hmrc see this contact as part of the sdlt submission?

No.

If not how did they get the 'list' referred to in para 24?

By asking for it - see a few paragraphs later! Obviously a response of "no comment" from the taxpayer or their solicitor won't make HMRC any less suspicious, and they have other powers if people aren't cooperating.

If the list was provided after the initial query, what event or information prompted them to investigate in the first place?

As I said, the stated price being at the threshold makes it more likely to be investigated, perhaps they also check against market values or what the asking price for properties are, or there's something else about the taxpayer's circumstances which arouses suspicion. You could ask the same question about any other form of tax evasion, I don't know all the methodologies involved in who they choose to investigate further.

Clearly there solicitor had been told about this 8k, so again are you suggesting that the buyers should have not done this and kept it all off the record?

They'd still have had to hide the £8000 changing hands.

If so, would it make more sense to pay for example 20k for chattels on a 255k purchase and simply declare a net consideration of 235k to keep it well under hmrc's radar?

Makes it even more of an obvious undervalue for the house and a bigger evasion offence. Also a problem if you need the added value for your mortgage application.

phoebe1989seb

A few years back an acquaintance of ours sold a house for £250k and was given £10k in cash - not declared to anyone party to the contract except themselves - by the buyers! Apparently this wasn't even for chattels, but because the buyer believed the house was worth more, however didn't want to pay the additional SDLT :eek:

Otoh, when we were selling our house in 2007 our buyer gave us a cheque for over £5k for a few (antique) items we were not planning to take as we were downsizing considerably. They approached us informally about whether we were interested in selling anything in the property and it formed no part of the contract. They presented us with the cheque just after we'd exchanged. They didn't move into the house till a few days after completion so trusted us to leave these items behind when we/our removers vacated the property. However, the difference was that our house was sold for £585k so nowhere near the then SDLT thresholds........

mrginge

davidmcn wrote: »

Makes it even more of an obvious undervalue for the house and a bigger evasion offence. Also a problem if you need the added value for your mortgage application.

How would they know if it was an undervalue if all that have is one number?
My example was extreme, so obviously mortgages and other considerations would be a factor is some cases.

when I self assess I am asked to input all the relevant information relating to gross and net income. I also declare total revenue and allowable expenditure. I don't just stick one net figure in and hmrc believe me. They check my submission using all that input and presumably other data.

It doesn't therefore make sense that the sdlt submission does not use the same principle. I understand what is on the form, but I don't understand why hmrc would not want to know *from somewhere* what the total consideration is. It's not logical that if they need to check a tax calculation and flag up potential issues then they don't use the key information that would make their job easier.

Why would they not just add another box for either total consideration or exempt consideration onto the submission?
If the answer is hmrc are useless then I can accept that.

davidmcn

Probably because it's not worth their while - the amounts involved are typically small (they're not interested that you've paid £1000 for some second-hand kitchen appliances, and telling them that doesn't prove that the amount really was only £1000 or that the appliances are really worth that or even exist), and to a large extent it's self-policed because you'd need to persuade the other party (and possibly solicitors) to aid and abet you in your tax evasion.

And they never have asked - in the old days you just sent the deed (bearing the net figure) to be stamped.

mrginge

davidmcn wrote: »

Probably because it's not worth their while - the amounts involved are typically small (they're not interested that you've paid £1000 for some second-hand kitchen appliances, and telling them that doesn't prove that the amount really was only £1000 or that the appliances are really worth that or even exist), and to a large extent it's self-policed because you'd need to persuade the other party (and possibly solicitors) to aid and abet you in your tax evasion.

And they never have asked - in the old days you just sent the deed (bearing the net figure) to be stamped.

Yes, fair points. While it's nowhere near the same effort needed to capture a bit of extra information as it was a few years ago, the benefit or priority is probably too low to worry about.

Doesn't change my view that if you have any chattels you should inform your solicitor though....