Delighted to see that the BBC has picked up the intiative on the problems that are potentially in store for people trying to avoid paying Stamp Duty Land Tax (SDLT) when buying their property.
As we have been warning, Revenue and Customs (HMRC) are continuing to crack down on this; an HMRC spokesman said: "The schemes rely on an interpretation of law that produces an outcome different from that envisaged when the law was enacted, and that HMRC does not accept."
As we continue to warn our clients, HMRC have confirmed that they are gearing up to challenge the schemes through the courts - all the risk is with the client on this one.
Friday 28 October 2011
Wednesday 19 October 2011
We're not letting this one go
Having just got off the telephone from a buyer seriously considering using a Stamp Duty Land Tax savings scheme, we continue to be surprised by the tactics firms are using to convince people to use them.
In this particular case, the client was told that "a leading political party used such a scheme to save money on buying the Dickens & Jones building in London", so they must be OK. Now, we don't want to cast any aspersions here, but are they serious?
The other problem as clients are now finding out is that many lenders will simply not lend to anyone that is using such a tax savings scheme. The rationale is quite simple - lenders are concerned that the revenue will come after them (and there is no time limit on that) for the outstanding SDLT tax that they didn't pay. This means that the client may potentially be out of pocket and may not be able to keep up the payments on the mortgage. Hence, they wouldn't want to lend to such people.
Simple really, but clients can be influenced by the very attractive proposition so we continue to urge caution.
Oh and yes, our client did decide to instruct us for their purchase because, in their words, the other method "wasn't worth the risk"
In this particular case, the client was told that "a leading political party used such a scheme to save money on buying the Dickens & Jones building in London", so they must be OK. Now, we don't want to cast any aspersions here, but are they serious?
The other problem as clients are now finding out is that many lenders will simply not lend to anyone that is using such a tax savings scheme. The rationale is quite simple - lenders are concerned that the revenue will come after them (and there is no time limit on that) for the outstanding SDLT tax that they didn't pay. This means that the client may potentially be out of pocket and may not be able to keep up the payments on the mortgage. Hence, they wouldn't want to lend to such people.
Simple really, but clients can be influenced by the very attractive proposition so we continue to urge caution.
Oh and yes, our client did decide to instruct us for their purchase because, in their words, the other method "wasn't worth the risk"
Thursday 6 October 2011
It's October 6th ... and the world hasn't ended
October 6th - the day when the world was due to end for all lawyers trying to earn an honest living from selling their legal wares.
However, it was more of a whimper than a bang, although we were amazed to hear the BBC Radio 4 news announce the change in the law throughout its morning bulletins this morning.
According to the BBC News, from today, supermarkets and other companies will be able to offer legal services and this was going to be of huge benefit to consumers.
Forgive us for being a little sceptical - a quick search on the internet today will reveal companies promising to carry out conveyancing for £99 (plus VAT of course) so is this really an appealing opportunity to "major brands". In reality, it is unlikely that more than just a few companies will be willing to take on the risks associated with such provision.
Financial services are often used as an example of where major firms have made inroads, but the comparisons are not necessarily valid. It is unlikely that legal services will ever be as commoditised as financial services, simply because there's far more involvement required from the client. Buying insurance products is a relatively straightforward process whereas buying a house or organising a Will takes a great deal of time and effort from all parties. For those clients looking for expertise and advice, such an alternative route is unlikely.
Although we've pioneered this new model several years ago, we look forward to seeing how other new firms approach this potential new market, but expect it will be several years before any wholesale changes will come.
However, it was more of a whimper than a bang, although we were amazed to hear the BBC Radio 4 news announce the change in the law throughout its morning bulletins this morning.
According to the BBC News, from today, supermarkets and other companies will be able to offer legal services and this was going to be of huge benefit to consumers.
Forgive us for being a little sceptical - a quick search on the internet today will reveal companies promising to carry out conveyancing for £99 (plus VAT of course) so is this really an appealing opportunity to "major brands". In reality, it is unlikely that more than just a few companies will be willing to take on the risks associated with such provision.
Financial services are often used as an example of where major firms have made inroads, but the comparisons are not necessarily valid. It is unlikely that legal services will ever be as commoditised as financial services, simply because there's far more involvement required from the client. Buying insurance products is a relatively straightforward process whereas buying a house or organising a Will takes a great deal of time and effort from all parties. For those clients looking for expertise and advice, such an alternative route is unlikely.
Although we've pioneered this new model several years ago, we look forward to seeing how other new firms approach this potential new market, but expect it will be several years before any wholesale changes will come.
Sunday 2 October 2011
The Partnership Newsletter - September 2011
"Mirror mirror on the wall ... who is the fairest of them all?"
In our opinion, it's certainly not some lawyers. We find the recurrent concerns raised about regulating estate agents ironic, given the increase we've seeing in the dubious practice of "salami slicing" of fees by lawyers, who are highly regulated. We've seen examples this week of clients being quoted for spurious items such as "Land Transaction", "Investigation" and "Fast Completion" designed to confuse the client who thinks they are standard items making the base price appear lower. If agents used such weasel words to confuse their clients, they would be held up under the Property Misdescriptions Act. We know firsthand about pressure on fees, but we would like to see an end to this questionable practice and we will continue to offer fixed, transparent pricing to our clients.
Stamp Duty Land Tax Avoidance - A risk worth taking?
Despite the changes in the budget that outlawed many of the schemes that clients have been using to try and avoid paying Stamp Duty, we are still finding a few clients who want to take the risk. The firms that provide the schemes confirm that they are not foolproof, and we are aware of cases where they have gone wrong. While today, the practice is not illegal, Revenue & Custom have made it clear that they will crack down on it and in the future there is the possibility of further action. We have highlighted our opinions on our blog and continue to warn our clients to be aware of the risks involved with such schemes.
Lack of disclosure invalidates insurance
It is standard practice in insurance that the policy holder must fully disclose any facts that may impact their position, otherwise the insurance may be invalidated. Insurers have refused to pay out on buildings insurance when they learnt that a person living at the property has a criminal record that had not been previously disclosed. The classic scenario is the student arrested for being drunk and disorderly whilst away at university and returns home without telling his or her parents. Then, there is a catastrophic fire and the insurer learns of this offence and avoids paying out under the buildings insurance. Policy holders should be aware of this potential risk.
The Partnership League
We are aggressively rolling out our Partnership League to an increasing number of agents around the country and it is proving extremely popular. In the last week alone, we have received over 20 referrals from agents who are on the scheme, and we are recruiting more every day. Contact us us for more information on how to join our unique scheme.
In our opinion, it's certainly not some lawyers. We find the recurrent concerns raised about regulating estate agents ironic, given the increase we've seeing in the dubious practice of "salami slicing" of fees by lawyers, who are highly regulated. We've seen examples this week of clients being quoted for spurious items such as "Land Transaction", "Investigation" and "Fast Completion" designed to confuse the client who thinks they are standard items making the base price appear lower. If agents used such weasel words to confuse their clients, they would be held up under the Property Misdescriptions Act. We know firsthand about pressure on fees, but we would like to see an end to this questionable practice and we will continue to offer fixed, transparent pricing to our clients.
Stamp Duty Land Tax Avoidance - A risk worth taking?
Despite the changes in the budget that outlawed many of the schemes that clients have been using to try and avoid paying Stamp Duty, we are still finding a few clients who want to take the risk. The firms that provide the schemes confirm that they are not foolproof, and we are aware of cases where they have gone wrong. While today, the practice is not illegal, Revenue & Custom have made it clear that they will crack down on it and in the future there is the possibility of further action. We have highlighted our opinions on our blog and continue to warn our clients to be aware of the risks involved with such schemes.
Lack of disclosure invalidates insurance
It is standard practice in insurance that the policy holder must fully disclose any facts that may impact their position, otherwise the insurance may be invalidated. Insurers have refused to pay out on buildings insurance when they learnt that a person living at the property has a criminal record that had not been previously disclosed. The classic scenario is the student arrested for being drunk and disorderly whilst away at university and returns home without telling his or her parents. Then, there is a catastrophic fire and the insurer learns of this offence and avoids paying out under the buildings insurance. Policy holders should be aware of this potential risk.
The Partnership League
We are aggressively rolling out our Partnership League to an increasing number of agents around the country and it is proving extremely popular. In the last week alone, we have received over 20 referrals from agents who are on the scheme, and we are recruiting more every day. Contact us us for more information on how to join our unique scheme.
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