Technology1 min ago
Stamp Duty Tax Savings Scheme
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Has anyone seen a contract to sell a house that uses a stamp duty mitigation scheme? I think it needs to be assignable?
thanks.
thanks.
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Probably best not to go there.
HMRC are in the process of closing these loopholes off fast - and seem to be making noises that they will retrospectively claw back lost revenue. There are various schemes, mostly designed for people buying houses in the top bracket of SDLT.
An earlier one (now closed off) involved arrangements set up to satisfy Sharia law whereby the sales transaction was done in two staggered payments (one small, one large) and involved transfer of the property to a third-party company who then 'assigned' the property to the end buyer without further liability to SDLT. Because the first of two staggered payments was small and SDLT was assessed on it alone, the total SDLT payable was small. I gather many purchasers were not Muslims.
There's another scheme used by developers of existing properties as luxury flats whereby the developer buys the delirect property as a company, pays SDLT, but then adds a whole lot of extra value during the conversion process. When the end product is sold to wealthy customers, they actually buy shares in the company owning the property, and hence it is share transaction and not a property transaction (on which SDLT would have been paid).
I suspect that if one is wealthy enough to want to use similar types of schemes one knows who to ask without resorting to AB.
HMRC are in the process of closing these loopholes off fast - and seem to be making noises that they will retrospectively claw back lost revenue. There are various schemes, mostly designed for people buying houses in the top bracket of SDLT.
An earlier one (now closed off) involved arrangements set up to satisfy Sharia law whereby the sales transaction was done in two staggered payments (one small, one large) and involved transfer of the property to a third-party company who then 'assigned' the property to the end buyer without further liability to SDLT. Because the first of two staggered payments was small and SDLT was assessed on it alone, the total SDLT payable was small. I gather many purchasers were not Muslims.
There's another scheme used by developers of existing properties as luxury flats whereby the developer buys the delirect property as a company, pays SDLT, but then adds a whole lot of extra value during the conversion process. When the end product is sold to wealthy customers, they actually buy shares in the company owning the property, and hence it is share transaction and not a property transaction (on which SDLT would have been paid).
I suspect that if one is wealthy enough to want to use similar types of schemes one knows who to ask without resorting to AB.
What? You mean HMRC only allows them to do that if they're genuine Muslims? So if you convert you can save stamp duty? That can't be right. That looks like discrimination! I thought sharia stuff was to do with them ebing against interest on loans - which is a misunderstanding - because it was usury (excessive interest) - not merely 'interest' itself the old testament was against - but now I'm posting in the wrong topic area.
No - the purpose of the scheme was to enable a property transaction that would be acceptable under Sharia Law - it's the assignment bit they needed. Split transactions weren't envisaged by HMRC; the scheme was intended for Muslims but could be used by anyone (though it would have no tax benefit).
Some bright tax accountant then realised that if the purchase transaction was split in two, SDLT would only be liable on the first payment.
Some bright tax accountant then realised that if the purchase transaction was split in two, SDLT would only be liable on the first payment.
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