Should I buy a scheme through avoidstampduty.com?

Home Forums Patrick Cannon Should I buy a scheme through avoidstampduty.com?

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  • #415 Reply
    Hannah Mackinlay
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    Have you seen this website which suggests the following scheme works (quoting direct from the site). I personally cannot believe that this blatant arrangement does work as it is so simple. Where is the catch??!!!

    1. The contract becomes assignable, and uses a nominee company to stand between the Seller and the Buyer. This company is wholly owned by the Partners of our nominated solicitors and is usedsolely for the purpose of the Stamp Duty Scheme.
    2. We ensure that under the terms of the contract the initial purchaser cannot ever complete under thecontract, this means that a chargeable interest cannot accrue. Legislation stipulates that for a transfer of land to be subject to stamp duty it must be substantially performed, this means that 90% of the consideration of the contract must be paid from the buyer to the seller. In order to avoid triggering substantial performance, at the point of completion the buyer (the nominee company) pays 85% of the purchase monies to the seller, the buyer then exercises it’s right to assign the contract to the 2nd buyer (you- the client).

    The fact that only 85% of the purchase price has been paid means that the contract has not been substantially performed, and therefore no Stamp Duty is due on this payment. When the contract is assigned the remaining 15% is made to complete the purchase, this second payment is subject to Stamp Duty.

    The initial purchaser can be substituted by someone nominated by the client, but this person must not be related to the transaction. This scheme takes account of legislation changes made in the pre budget of December 2006 and in particular s75A Finance Ac

    #416 Reply
    Patrick
    Guest

    I doubt that this works for several reasons. One clue may lie in asking where the monies to fund the 85% payment by the nominee come from? Another clue is whether the “nominee” is truly a nominee and if so who is the principal? Love the name of the company though – so subtle – why not have denyfundsforschoolsandhospitals.com !

    #417 Reply
    Dan Cowley
    Guest

    I’m a bit new to this forum so forgive me if this isn’t the right form but I have an interesting variation on this theme. What if instead of a nominee company paying the 85% you have (say) the husband pay this amount who then gifts the benefit of the contract to his wife who then pays the remaining 15%? I’m sure this must be caught but am not quite sure how or why (would the disclosure rules apply also?)

    #418 Reply
    Patrick Cannon
    Guest

    Where you have the assignment of a contract especially between connected persons I think you face an uphill task in arguing that the 85% should not be taxed as well as the 15%. I don’t like 85/15% schemes at all and would be wary of them.

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