RLA : RPI : Fitting questions may land sellers in trouble

News from the Residential Property Investor, the bi-monthly magazine for RLA members

other artilces from the December 03 / January 04 issue

Fitting questions may land sellers in trouble - December 2003 / January 2004

Accountants are warning that property purchasers who try to prevent their transactions falling into a higher stamp duty land tax rate band by overvaluing fixtures could find themselves in trouble.

In line with other 'self assessment' taxes, the new stamp duty land tax (which replaced stamp duty as of 1 December) is a 'process now, check later' system. It is backed by investigations of a sample number of the land transaction returns. These must be completed for all relevant transactions within 30 days of completion (the information required includes the names and National Insurance numbers of individuals involved).

There are penalties for late returns and those completed incorrectly will be rejected, although the Revenue has said it will initially apply a 'light touch' where this is concerned. This does not extend to payment of SDLT which will have to accompany the return.

But even where a return has been accepted and the cheque banked, it does not mean the Revenue has accepted that the amount of tax is correct. 'We will not have prejudiced our right to enquire into the transaction within the time limit allowed by the legislation', it advised.

It is expected the Revenue will be enquiring into about one in six transactions, with the emphasis on those for transactions involving amounts close to the rate band changes of £60,000 (below which no SDLT is payable) £250,000 (at which point the SDLT payable on the whole price jumps from 1 per cent to 3 per cent) and £500,000 (where the rate becomes 4 per cent). Use of unrealistic valuations for fixtures and fittings so as to bring the property part of the transaction down will be rejected, leading to penalties.

other artilces from the December 2003 / January 2004 issue

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