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Death & Taxes

14th April 2021

I once saw a billboard which said Death and Taxes on one side, on the other side it said always pay your taxes, and in regard to death it said there was a loophole, eternal life through Christ.

However, below I’ll be sharing a few “loopholes” in regards to tax.

I have been asked to revisit a property transaction that took place a couple of years ago.  The purpose is to see if there is a means to reclaim the stamp duty which has already been paid, and if this type of property should be exempt from stamp duty then this will help the onward sale of this property to a developer.

We currently have a tax specialist examining the transaction to see what relief, if any, can be claimed.  This would not be the first time a solicitor has charged the wrong stamp duty.

There are many reliefs and exemptions which are listed on the HMRC website, which many solicitors are unaware of.  Not only are they unaware, they do not tell you they are unaware.  A few say they do not advise on the stamp duty payable, and this will need specialist input.

There have been a couple of situations wherein we had to convince the solicitor of a particular transaction regarding the actual stamp duty payable.  In one scenario, the solicitor who was a partner in his firm, was not aware of the multiple dwelling relief available when purchasing a freehold block consisting of many flats.  In another, the transaction was completely exempt from stamp duty; we had to show the relevant legislation to the solicitor for him to apply it to the purchase!!!

Stamp duty is an area which has its many nuances, and when purchasing property it’s always worth looking into this aspect by a specialist.  Even something as simple as purchasing a residential property in the country.  If there is a right of way, for example, it could possibly benefit from an exemption.

These are not some pie in the sky schemes, which will blow up in years to come.  This is the legislation written in law, in plain sight.

This revisiting of a transaction occurred off the back of a conversation I was having with an accountant who specialises in property.  His assertion, for this particular property, was if the property was uninhabitable at the time of purchase, no stamp duty should have been payable.  The definition of unhabitable is not simply that it needs a quick make over; it is so much more than that.  With this property, the utilities were not connected, and deeper inspection into the details may find that it was under the category of uninhabitable.  Therefore, it’s being examined more forensically by a specialist to see what reliefs or exemptions it might qualify for.

On a development transaction we sourced for an investor, he was pleasantly surprised when we managed to purchase the property without any stamp duty payable whatsoever.

These are not the only exemptions available.  For example, there is something called capital allowances.  Recently, we managed to get about £275K of capital allowances for clients we are working with on a commercial building undergoing development.  This acts as a tax credit which means our investors can take up to this much income from the project, without paying a penny in tax.  These examples are from our experience.  Remember, that each scenario is different, and therefore it is always important to take sound advice from a specialist.

Suresh Vagjiani

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