Stuart Taylor

Just wanted to know whether or not it was ilegal to try and avoid stamp duty. The reason being I have my house on the market for £269,000 and have just been offered £265,000 but the purchasers only want to pay £250,000 for the house and £15,000 for fixtures and fittings to try and avoid the 3% stamp duty. Could this be investigated by the inland revenue and if so who would be in trouble and have to pay if they thought something dodgy was going on.

Thanks for any replys Stuart

MarkO

It's almost certain to be investigated, on the basis that purchases around the thresholds are the cases which are looked at most closely - for the exact reason you're specifying here.

That's not to say you shouldn't give it a punt - especially if you know/trust the buyers. But you should ask the question whether you want to take the risk.

22BUK

I believe you can sell them an option for £50,000, to buy the house for £215,000. (Change amounts as necessary...)

carl

£15k sounds a bit much for fixtures and fittings.

Tiggs

ok- having just bought a house for £270- and been to hell and back on this......

you have to sign to say that the deal is not part of a larger deal- so the first point is if you lie its your neck on the block, however- i had a long chat to the revenue and they say that while the max penalty is to charge you the stamp you owe and double it!!! that rarely happens and you normaly just have to cough up the money.

as to what they will allow.... the revenue and 90% of solicitors will be fine with paying £5k extra, between £5-10k most solicitors will get funny and the revenue- if they checked which is RARE- would probably investigagte. (dont forget its not just your solicitor but the others may get funny to)

go over £10k and unless there is a very good reason most solicitors say NO and the rev. will have you up (again, if they check)

of course this assumes you tell the solicitor- if you dont then its never gonna be heard about but are you happy doing an ilegal cash deal with someone????

T

speedking

Why not buy my old car for £700.

You can sell them the car for £15700, and your house for £250,000

There is surely no maximum limit on the price for a car. The fact they wanted both at the same time is a happy coincidence.

[sits back and waits for phone to ring]

[Edited by speedking - 8/21/2002 12:56:45 AM]

Tiggs

just re-read your post- as its you that is selling then you are able to go ahead if you want to and everyone is happy- its them who are evading the stamp- not you.

i'd be surprised if your solicitor would advise you to do this though even though you are not liable.

the first house we went for was £260 and we wanted £10 of f and f- their solictor told them not to do it though despite my solicitor saying it wasnt his clients who would be liable.

when we got our £270 house we just paid £270- no one was going to do £20k f and f

T

dharbige

According to my Tax consultant neighbour, you can avoid Stamp Duty any ANY house purchase, totally legally, just by using the right solicitor.
If your solicitor can register the deeds transfer electronically (which some of them can), the documents do not need to be "Stamped" and you don't have to pay the Stamp duty.

Apparently, this "loophole" will be closed next April.

Disclaimer: I KNOW NOTHING on this subject, and am just repeating what I was told by somebody who should be in the know.

Stuart Taylor

Thanks for all the replies. Very interesting reading. I think I will have to refuse the offer and make them pay the full stamp duty if they want the house.

Stuart

camk

We paid 5 grand for curtains/blinds in our last house, house sold for 180K. Add another 4 grand for carpets and your nearly there. If you'll get anther buyer easily then fine but what if they pull out ?

Regards
Cammy

[Edited by camk - 8/20/2002 2:25:47 PM]

David Lock

DH - Seems too good to be true but since I am in the market for a house I would be interested to hear from any solicitors/legal bods on this board. Or is this just another Luton Phone Scam myth – I am 99% sure it must be ....??

Chrisgr31

It is possible to offer x for the house and Y for the fixtures and fittings but the figures have to be reasonable.

I did it myself to avoid stamp duty on my present house although I was looking to get in the exempt bracket. I therefore paid £59,500 for the house and £500 for the carpets, curtains and bedroom cupboards.

So if the £15,000 for the fixtures and fittings is reasonable then fine, if its not then the inland revenue may investigate

Stuart Taylor

We have had a good think about it and as we only put it on the market on Saturday and this was the first people we had round to view then I think we may hold out for a better offer with no stamp duty avoidance involved.

Stuart

chris singleton

Stuart

What most of you say is quite correct, I should know being a conveyancer (or a trainee at least )

The key is to remember there is a very fine line between tax evasion and tax avoidance.

In general once you've cross the £60,000.00, £250,000.00 or £500,000.00 threshold a lot of people try the X amount for fixtures and fittings route. If you can justify the amount for fixtures this isn't always enough especially if the house is valued well over the threshold. £5,000.00 or thereabouts will normally be acceptable in your case (again, if you can justify it, carpets, curtains, cooker, fridge, light fittings, etc,) but above that and its certainly isn't worth the risk.

I certainly wouldn't advise you to go ahead with it and I very much doubt the buyer's solicitor/conveyancer would either.

Never heard of registering the Transfer electronically and avoiding Stamp Duty altogether, smells a bit fishy

As of 30th November 2001 some areas depending on purchase price are now exempt from Stamp Duty although this wouldn't apply in this instance as your selling for quite a bit.

Hope this helps, let me know if you have any more queries.

Chris

[Edited by chris singleton - 8/20/2002 3:11:40 PM]

Tiggs

as above- plus...electronic transfer??? sounds pants.

t

ps- for those of you that pay £5,000 for carpets- you might as well not bother saying its for carpets because if the IR ever check you will not in a zillion years get away with it unless they are made from silk

boomer

I think that Stamp Duty is, technically, a voluntary tax that you cannot be forced to pay.

However, if you don't pay it, then the Land Registry won't do their stuff and you will find it hard to prove ownership (and even harder to get a mortgage!).

I wonder what would happen if the major building societies got together to run their own "registry". They could charge, say, a grand for the privilege, and if they all recognised the status it would be one in the eye for Gordon Brown

mb

Tiggs

what???

electronic registering and now volantary???? is this old wives tales day

Dave T-S

Since we are about to pay £12,660 stamp duty, I was more than a little bit interested in this!

Just spoken to my solicitor (who has been conveyancing for 25 years) and it is, sadly, another urban myth

Yes, there is an intention for land to be registered electronically (I don't think it can be done yet, or there may be a pilot scheme) but it won't remove the obligation to physically pay stamp duty.

It's a nice little earner for the slimy government, plus a windfall as property prices have shot up so the stamp duty does too, and the only way it is likely to go down is by putting your "X" in a different box at the next general election.....

Reffro

Lets not forget capital gains tax if you have lived too long in your current house before selling, that's the latest wheeze Tony's cronies managed to come up with. So you are forced to move more often, paying stamp duty every time, if you want to avoid the CGT. I know its not policy, but it is up for discussion at the moment.....

Pavlo

sure the gains tax would be applied to people not living in houses long enough? Cashing in on the property market etc.

Reffro

That's the perverse thing, the tax would be paid if you live too long in one property. Because if you made a short term killing, anyone buying the house you made a killing on would have paid the stamp duty again. So the treasury rakes it in both ways, you stay too long you pay in the end, if you sell quickly you pay the stamp on your next house, no way to avoid it, barstewards..........

chris singleton

Registering the propety electronically wouldn't make any difference to stamp duty.

The Stamp Duty is paid to the Inland Revenue.

The Registration is dealt with by H.M. Land Registry and you pay a "registration fee" which like stamp duty depends on the purchase price. Under £70,000 = £70, under £100,000 = £100, under £200,000 = £200, £200,000 or above = £300 (I think, all from my very limited memory )

They are two completely different entities.

Hope this helps.

Chris