Scotland - Additional Dwelling Supplement

collieman

In Scotland in 2016, Additional Dwelling Supplement (ADS) was widely promoted and sold to the population as an additional amount when buying a second home or a buy-to let. Purchasing a main residence was NEVER mentioned yet by the backdoor this is exactly what did happen. Buyers are being caught unaware when buying their next main residence due to "accidental ownership" (buy next main residence before selling current one) and even more unbelievable after selling their main residence, moving into a rented house to take their time to find their next home but just happen to already own say a holiday home but take more than 18 months to buy. Under 18 months and they won't pay - it really is that ridiculous. In this circumstance buyers are effectively being time limited on buying what could be their most important lifetime purchase. This is where it might be worth opening this up to debate and see how many are technically being unfairly trapped. Most buyers will simply trust whatever their solicitor or Revenue Scotland demands. I would urge anyone, for the moment, to forget published guidance because that's all it is - guidance. The only thing that matters is what the Statutory Legislation says. Have a look at the Scottish Government Statutory Legislation Schedule 2A Part 2 and follow Paragraph 2(1) exactly word for word. This is the paragraph that details the conditions to determine if ADS applies. Anyone should be able to determine their own situation by applying these conditions. If you or someone you know has been told to pay ADS when purchasing a main residence then were all the conditions satisfied? Revenue Scotland will argue there are definitions to clarify the term "main residence" but there is nothing mentioned in the conditions to alert the reader to this and therefore the common, everyday meaning of a main residence must apply.

[Deleted User]

collieman said:

In Scotland in 2016, Additional Dwelling Supplement (ADS) was widely promoted and sold to the population as an additional amount when buying a second home or a buy-to let. Purchasing a main residence was NEVER mentioned yet by the backdoor this is exactly what did happen. Buyers are being caught unaware when buying their next main residence due to "accidental ownership" (buy next main residence before selling current one) and even more unbelievable after selling their main residence, moving into a rented house to take their time to find their next home but just happen to already own say a holiday home but take more than 18 months to buy. Under 18 months and they won't pay - it really is that ridiculous. In this circumstance buyers are effectively being time limited on buying what could be their most important lifetime purchase. This is where it might be worth opening this up to debate and see how many are technically being unfairly trapped. Most buyers will simply trust whatever their solicitor or Revenue Scotland demands. I would urge anyone, for the moment, to forget published guidance because that's all it is - guidance. The only thing that matters is what the Statutory Legislation says. Have a look at the Scottish Government Statutory Legislation Schedule 2A Part 2 and follow Paragraph 2(1) exactly word for word. This is the paragraph that details the conditions to determine if ADS applies. Anyone should be able to determine their own situation by applying these conditions. If you or someone you know has been told to pay ADS when purchasing a main residence then were all the conditions satisfied? Revenue Scotland will argue there are definitions to clarify the term "main residence" but there is nothing mentioned in the conditions to alert the reader to this and therefore the common, everyday meaning of a main residence must apply.

Additional Dwelling Supplement, the clue is in the name. Are these people buying a new home without first selling the current home buying an additional dwelling? Yes, quite clearly they are so the supplement is due. 

collieman

Read the legislation.

Slithery

Did you have a question?

It's always been the buyers responsibility to research what costs they are liable for. 'Additional Dwelling Supplement' doesn't have the the words 'buy to let' anywhere in the title or the legislation.....

user1977

collieman said:

Read the legislation.

Might have helped if you had pointed us towards the relevant legislation, but here's a link to what you're talking about. Still not sure what your point is though - have you found any cases of people paying the supplement incorrectly, and if so what were the circumstances?

SDLT_Geek

collieman said:

In Scotland in 2016, Additional Dwelling Supplement (ADS) was widely promoted and sold to the population as an additional amount when buying a second home or a buy-to let. Purchasing a main residence was NEVER mentioned yet by the backdoor this is exactly what did happen.

Buyers are being caught unaware when buying their next main residence due to "accidental ownership" (buy next main residence before selling current one) and even more unbelievable after selling their main residence, moving into a rented house to take their time to find their next home but just happen to already own say a holiday home but take more than 18 months to buy. Under 18 months and they won't pay - it really is that ridiculous.

In this circumstance buyers are effectively being time limited on buying what could be their most important lifetime purchase. This is where it might be worth opening this up to debate and see how many are technically being unfairly trapped. Most buyers will simply trust whatever their solicitor or Revenue Scotland demands.

I would urge anyone, for the moment, to forget published guidance because that's all it is - guidance. The only thing that matters is what the Statutory Legislation says. Have a look at the Scottish Government Statutory Legislation Schedule 2A Part 2 and follow Paragraph 2(1) exactly word for word. This is the paragraph that details the conditions to determine if ADS applies.

Anyone should be able to determine their own situation by applying these conditions. If you or someone you know has been told to pay ADS when purchasing a main residence then were all the conditions satisfied? Revenue Scotland will argue there are definitions to clarify the term "main residence" but there is nothing mentioned in the conditions to alert the reader to this and therefore the common, everyday meaning of a main residence must apply.

The legislation OP refers to can be found in the Land and Buildings Transaction Tax (Amendment) (Scotland) Act 2016 https://www.legislation.gov.uk/asp/2016/11/section/1/enacted  which adds the Schedule 2A which OP refers to. 

As well as paragraph 2(1), there is paragraph 2(2) which explains what is meant by a buyer "replacing the buyer's only or main residence".  It involves a sale or disposal within the previous 18 months of a property which was the buyer's only or main residence.

Although the legislation does not define what it means for a person to have lived in a home as their residence, there is a body of case law on the meaning of the same words in the capital gains tax legislation.

AdrianC

collieman said:

Buyers are being caught unaware when buying their next main residence due to "accidental ownership" (buy next main residence before selling current one)

Don't you just hate waking up after a large night, head throbbing... to the dawning realisation that, somewhere between leaving the pub and grabbing that ill-judged kebab that's currently drying onto your duvet, you accidentally bought another house...?

Can't even really claim you won it in a game of cards...

At least the lockdown closure of pubs has reduced the chances of such horrible accidents.

(Still, it's a tiny bit easier to understand that than the whole convoluted chain of accidentally preparing a property to let, accidentally finding a tenant, accidentally signing the tenancy, accidentally waiting for two years while they lived there, then claiming it was all a horrible accident that you ended up a landlord.)

collieman

Paragraph 2(2) is not a subset of 2(1) but on the same level therefore 2(2) can only be considered if 2(1) passes. "Accidental ownership" is a widely used term when someone hasn't been able to sell their house but has already bought their next house. Fight it out between yourselves because as usual in these forums when someone tries to help people who might find themselves in unexpected situations or maybe has a different point of view it's always shot down. If you haven't been caught out with ADS when buying your main residence then go and hijack another post. Goodbye.

Slithery

Ignorance has never been an excuse for breaking the law....

'Sorry I was doing 120mph officer. No-one ever told me that the speed limit was 70'.

AdrianC

collieman said:

"Accidental ownership" is a widely used term when someone hasn't been able to sell their house but has already bought their next house.

That sounds very deliberate to me.

And, since it's now five years since the legislation passed into law, I'd be surprised if there was anybody who was genuinely caught out by its introduction - rather than simply failing to understand it.

davilown

Please,
Not another ‘let extend the stamp duty holiday’ type of thread.

People, please understand what the rules and regulations are where you are going to be buying!