Fine print? What
do you mean? It all
looks fine to me...
and transactions are treated in the same Changes to the penalty regime avoidance (legal) and tax evasion (illegal)!
way as their equivalent non-shariah This one is not limited to SDLT. Across the For the last few years there has been an
transactions; eg to remortgage under board, HMRC have new powers to obligation to disclose the use of tax saving
shariah law you need to sell your house to penalise late payment or indeed non- schemes. This applies to a whole range of
the bank and live there under a lease payment of tax. This will include SDLT, taxes, including Stamp Duty Land Tax.
granted back to you by the bank. advisers need to familiarise themselves This doesn’t affect whether the scheme
The issue arises because under shariah with the new regime. works, but does make it easier for HM
law certain things are prohibited, and in Revenue and Customs to block them.
particular the payment of interest. DisClosure of tax avoiDanCe To date, SDLT planning for residential
Therefore, creative minds have come up Whilst this might seem esoteric to most property has managed to escape this.
with transactions which give rise to the property professionals it is a change which However, a consultation document
same economic effect as if interest had has the potential to shake up certain parts published on budget day looks to extend
been paid. Often property is used either as of the higher end of the market. Stamp tax that in the near future to residential
security or to provide a rental stream mitigation has long been prevalent in both property with a purchase price of more
equivalent to interest. the commercial and residential property than £1,000,0000.
And on that note it will be apparent that markets. Both bespoke planning and
the new relief from Stamp Duty Land Tax schemes are used to avoid SDLT, avoiding Shimon Shaw is a Solicitor at Matthew
and Capital Gains Tax for anyone wishing serious amounts of money. Arnold & Baldwin LLP
to obtain finance by issuing Alternative Please note – anyone thinking of cash
www.mablaw.co.uk
Finance Investment Bonds using land under the table or paying £50,000 for a
assets as securities provides a useful if beaten up sofa needs to understand the
Any views on this or advice to share?
somewhat limited boost to the City. subtleties of the distinction between tax
www.propertydrum.com/articles/SDLT
PROPERTYdrum JUNE 2009 17
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