Thursday, Mar 18, 2010
Ninety-eight, ninety-nine ... one hundred! Coming to get you .... !
Times: Taxman scrutinises property amateurs
Its almost a modus operandi for the taxman now - instead of cutting short any mass tax evasion, they let it run for a while unchecked so that the unwitting fill their boots then the taxman comes and fleeces them for the shirts on their backs. Still, it couldn't happen to a nicer group of people, eh?
Posted by paul @ 08:21 AM (1829 views) Add Comment
40 Comments
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1. p. doff said...
They should follow the MP's example and simply flip the designation of their second home a few times, so that any tax liability magically evaporates.
2. p. doff said...
P.S If property amateurs are the target for today's HPC hate campaign, does that mean the baby-boomers get a day off?
3. hpwatcher said...
I wonder whether BTL will continue to be attractive - if you have to do it legally and pay the proper taxes?
4. braindeed said...
3. hpwatcher said...
I wonder whether BTL will continue to be attractive - if you have to do it legally and pay the proper taxes?
Let's hope not.Could be a cash cow during the next couple of barren tax collecting years, and that would jolly along the supply side..... revealing the true nature of the engineered housing 'shortage'.
5. str 2007 said...
From the article
New Software enables the Inland Revenue to troll through the Land Registry more easily.
It's hard to believe you can't track down owners of imovable objects more easily.
They seem to know every cars owner and whether or not that car is tax and insured. There must be 2-3 times more cars than houses and they're traded I'd guess on average 2-3 times more frequently on average.
Surely, as I understand the rules a main residence is tax free (where you would be registered to vote. Any others must in some way have a tax implication - simples.
Is any else surprised they can't easily track down flippers, btlers, holiday letters and developers ?
6. mark wadsworth said...
@ p.doff. I, for one, do not go round bashing BTLers, property developers, estate agents or banks, that's for beginners and missing the point. I'm not even too bothered about baby boomers. I'd rather go against the hard target, i.e. Home-Owner-Ists generally.
@ STR, there are approx. as many cars as there are homes in this country, i.e. approx one per household. But that is a fair point and one I had made time and again. HM Land Reg have had all their stuff computerised for years, it must be the work of a few hours to do a bit of data mining, maybe cross reference their records with the banks' record of mortgage lending (mortgages are registered at HM Land Reg, not the amount but the name of the lender) and then track down BTLers and property developers. I even know property developers who have merrily bought and sold properties, paid the Stamp Duty Land Tax to HMRC, banked the money and then not declared a penny of income for tax purposes.
In theory and in practice, property taxes are the easiest to collect and the most difficult to evade (which is argument for Land Value Tax number 362). For example, Council Tax collection isn't brilliant but they do get in about 95% of what they are supposed to - most of the fraud and so on happens with single person and vacant property discounts, Council Tax Benefit and so on.
7. estrader said...
I can't figure out why there is such hatred of BTL's. Who are all the current STR's renting from at the moment? Would you prefer compulsory ownership of property, ie/ No choice over whether you buy or rent?
8. cynicalsoothsayer said...
I don't hate BTLs but I have absolutely no sympathy for them. Many are just speculators pushing up the price of an asset class to unsustainable levels. The flip side is that FTBs get to rent off the BTLs for less while they wait for the market to crash.
9. letthemfall said...
Groups are the target of spleen here when they are seen to have benefited unfairly - in other words acquired more wealth than the value they have created. Hence the bashing of banks, probably the worst offenders on that score, amateur BTLs (who really leapt on the bandwagon in the hope of making easy money), estate agents who again have made easy money throughout the housing boom.
BTLs are part of the problem - not including professional landlords who meet a genuine need - but the real issue is inequality of wealth, whether this is in the form of overpriced and undertaxed assets or incomes.
10. p. doff said...
9. letthemfall said...''Groups are the target of spleen here when they are seen to have benefited unfairly - in other words acquired more wealth than the value they have created. Hence the bashing of banks, probably the worst offenders on that score, amateur BTLs (who really leapt on the bandwagon in the hope of making easy money), estate agents who again have made easy money throughout the housing boom.''
So what about all the gold bugs on this site who are 'hoping to make easy money' when gold 'goes to the moon' (as predicted by S2R1 et al). I assume that's ok as I don't see any spleen venting against these bandwagon leapers (though perhaps there will be if S2R1 is proved right). There again, what about all the STR's on this site who are hoping for a major crash so that they can make easy money by buying another house cheap. No spleen venting there either. Do I detect double standards here?
Better blindly carry on knocking the BTLers, baby-boomers and estate agents then.
11. hpwatcher said...
I don't hate the BTL people, they are just trying to make a buck - so good luck to them. But I am absolutely amazed over the past few years of the increase in numbers of people doing this. I know of a few work associates doing it too - but I can't imagine that they ever thought that they would have to pay tax.......add to that, possible increases in interest rates and property values falling. It's doesn't seem so attractive.
12. mark wadsworth said...
@ p.doff. comment 10. Nope. Those are the easy targets.
Let's go after the Home-Owner-Ists generally. The EAs, property porn stars, BTLers, bankers, estate agents etc are merely their footsoldiers. It's all well and good railing about bankers' bonuses, for example, but the total bonuses paid out each year, net of tax, were only about two per cent of the tax free paper capital gains that the Home-Owner-Ists were making each year.
13. hpwatcher said...
So what about all the gold bugs on this site who are 'hoping to make easy money' when gold 'goes to the moon' (as predicted by S2R1 et al). I assume that's ok as I don't see any spleen venting against these bandwagon
Well, holding Gold should be seen as a hedge - rather than anything else. It would be very unwise to start dreaming about Gold increasing in price to the tune of $1000's per ounce; the only people saying that are the gold dealers and their associates. I hold some Gold, but never read articles that are bullish about it, because they cloud one's judgement.
14. Mrmagooisagovteconomist said...
I have been saying this to my business partners (both into btl on int only mortgages) for a long time, its so obvious this was going to happen, the revenue doesnt like to see anyone making money and avoiding tax, if it wasnt for the scarcity of rentals (if btl disappeared) I have no doubt they would go for taxing property valuations (rises in prices) year on year, if they did this and we had a return to normal interest rates, its coming ! check out bloomberg and lloyds sudden interest in getting mortgagees to overpay therefore making it easier in the future to repossess those who arent prudent (overpaying now) and getting some cash in to lend out now as the wholesale mkt is dire and an escape from the zombie economy (people who can manage at todays la la land interest rates but no more) then you have your crash/return to normality, ie hard work/acumen/luck = sucess/wealth. Just as a foot note the debate about who to hate is a bit ridiculous imho as most people visting this site would love to have their own home and rightly so, but you cant knock those who where born at the wrong time I was born in 1965 and as such I am in the last of the baby boomers and have suffered from this all my life having to put up with high hpi, mass unemployment and denied opourtunities but I bear no ill will towards bbmrs, btlers etc your bile should be directed against those who elected by us, paid for by us, protected by us, who have in the last decade become our masters and not leaders, if you value your freedom to whinge, buy a house, rent a house, paint yourself blue get out and vote and get every one you know to vote,things can and will change just hold on to that belief and it will happen for us or our children.!
15. braindeed said...
hpwatcher @ 11said...
I don't hate the BTL people, they are just trying to make a buck - so good luck to them.
You're right in the sense that we would all like more dosh and to be a bit more secure (excepting the noble Buddhas amongst us).
Then again you could have said the same about slave traders - the question that I ask is... 'Is BTL immoral’?
The distortion on the supply side (2 million dwellings effectively removed from the supply side, when talking of potential sales) means that the demand on the other side is 'pent-up' or more honestly choked. Housing is a basic human necessity, and allowing the market to be cornered by the already comfortably off and well housed is an immoral cop out. BTL's may be indifferent or unaware of the consequences of their ‘investment, but it it's there, and as a society we must view the concern in a more holistic way or we doom generations to feudalism or HP slavery. Have as many houses as you want over and above your needs, but I say pay the 'market' price that that distortion inflicts on civil society, in the form of penalising taxes.
16. Crunchy said...
Not so sure myself. I have seen these articles long before and yet I hear of little action.
What's new in the world of unregulated false slavery. Some must prop up a failed system at all cost.
17. mark wadsworth said...
@ Braindeed, yet again, you going after an easy target, the BTLers.
By all means, we should have a lot less tax on incomes and output and a lot more on land or property values, but owner-occupiers would have to pay too. If somebody has a main residence; a holiday home; and a 'city crash pad' (whatever they are), then they will automatically pay three lots of tax, and rightly so (in the same way as the more income you earn, the more income tax you pay); if you're a tenant you pay effectively none (the tax is embedded in the rent you have to pay and does not increase it).
18. icarus said...
mark w @ 12 - bankers the mere footsoldiers of the home-ownerists? There were massive incentives in the banks to originate poorly underwritten mortgage loans and to benefit themselves (by reducing their risks, increasing their liquidity and expanding their leverage) by bundling bad loans into securities with the collusion of bribed credit rating agencies, .Securitisation was for the benefit of the financial sector and it fed the housing bubble. The finance industry encouraged housing-linked debt, refinancing (often on predatory terms the customer barely understood - especially in the US) MEW etc. If you look at the expansion of finance, the changes in the sector over the last decade or two and the profits it makes it's difficult to argue that this was done for home-ownerists. Inflating bubbles was the name of the game and property was an obvious target.
19. Crunchy said...
14, Braindeed.
Spot on!
20. letthemfall said...
pdoff
Investors in gold and other commodities, stocks, etc are not quite the same. People falling over themselves to buy gold do not have the impact on people's lives as that of the money flowing into housing. The price of gold has very limited impact on day to day living.
As I've said already, the problem is in people acquiring wealth at the expense of others, which is exactly what the housing boom has brought about. Naturally the people who are disadvantaged get angry about this. In the end it is the system as much as individuals that is to blame; but when those individuals who've benefited seek to maintain their unfair advantage others understandably get upset
21. braindeed said...
15. mark wadsworth said...
@ Braindeed, yet again, you going after an easy target, the BTLers.
...and yet again, you fail to comment on the actuality of my argument. Is it because the argument is weak, or is it because the sentient cell is on the blink?
22. inbreda said...
pdoff - as well as the argument that goldbugs dont affect peoples lives the same as BTLers there is also the point that BTLers wanted to make huge amounts of money by minimum effort by speculating - which would be fine if a) they took the pain when the roll of the dice didnt go their way and b) it didnt impact on society so negatively, and c) they didnt expect prudent hard working savers to bail them out when it all goes wrong.
You cannot tax hard workers to make speculation a one way bet, only for the speculators to laugh in the faces of the prudent, and expect civil unrest not to happen.
I have read the comments under the article and noted which have been recommended. That IMO is more revealing than anything else.
23. str 2007 said...
estrader, p.doff, braindeed
Just to respond, the BTLers are pushing people out of a restricted market, that is essential, by their actions.
Pension performance in general is so poor that people must have a paid for property by retirement age or we as a nation are stuffed (if not already).
If 1st time buyers can't purchase until later in life the serious problem is being sewn for the future.
If building land for small developers and individuals was readily available in all towns and villages the BTL market would be very much smaller and not be able to run on it current model (ie interest only relying on capital gains).
As for STR's being speculators from a personal view point I disagree. I want a family home, I don't want to burden my family with an oversized mortgage because of other policy/speculators pushing prices above sensible levels.
If it wasn't for their actions I wouldn't be renting.
With regard to S2R1 et al, If Gold goes throught he roof, their investment gains (or losses) won't reallu effect anyone else.
I understand why BTLers do what they do, but the process in it's current situation in plain wrong & immoral.
24. mark wadsworth said...
@ Braindeed, no I don't think BTL is immoral in the slightest, as Estrader explains at 7. It's not them restricting supply, it's the NIMBYs. Some people are quite happy renting.
What poisons everything is Home-Owner-Ism - the belief that house prices can only go up and MUST GO UP.
25. braindeed said...
mark wadsworth @21 said...
@ Braindeed, no I don't think BTL is immoral in the slightest, as Estrader explains at 7. It's not them restricting supply, it's the NIMBYs. Some people are quite happy renting.
You disagree? I'd actually worked that out. I have to say that your explanation as to why is rather flaccid.Please try harder.
26. bellwether said...
Mark might you not be as well to say that the cause is human nature, which being greedy and irrational tends to belive things like House Prices only go up.
If there is a poison (beyond our innate brutishness) , it lies will a failure of regulation at state level.
27. mark wadsworth said...
@ Braindeed, all right, you win, BTLers are pure evil and responsible for all ills in the Western World :-)
@Bellw, yes.
But there is such a thing as enlightened self-interest. As it happens, rising house prices make us collectively poorer. So really it is in our self-interest to keep them low and stable.
This doesn't just need changes to tax and regulations, it needs a massive programme of education.
28. braindeed said...
24. mark wadsworth said...
@ Braindeed, all right, you win, BTLers are pure evil and responsible for all ills in the Western World :-)
Ah…..such a deep reasonative treatise, ….but I’m afraid you lost me somewhat with the complexity of your macroeconomic theory. No more or less than what we have come to expect from this intellectual colossus.
& "it needs a massive programme of education"........Presumably taken from P.Pot's educational bible 'How to win friends and influence people' - I can hardly wait.....:-(
29. mark wadsworth said...
@ OK then Braindeed, you are my guru and henceforth I shall take every word you say as Gospel, whatever.
WTF does Pol Pot have to do with it? It's a simple fact that credit bubbles and house price bubbles are very bad for us. The more people accept this the better. We can argue about how to sort it out later on.
30. braindeed said...
mark wadsworth @26 said...
@ OK then Braindeed, you are my guru and henceforth I shall take every word you say as Gospel, whatever.
The point is, thats its not enough just to state a view as if it were holy.
I think you'd struggle to hold your own in a first year debating society.......on second thoughts, thats probably just what you would be doing as the more reflective kids jousted.
31. p. doff said...
17. letthemfall said...''As I've said already, the problem is in people acquiring wealth at the expense of others''
No, you didn't say that. You just said ''Groups are the target of spleen here when they are seen to have benefited unfairly - in other words acquired more wealth than the value they have created.'' As an example, you cited ''estate agents who again have made easy money throughout the housing boom''.
You were apparently originally knocking anyone you perceived to have made easy money and you have therefore changed your argument so you sound like a more reasonable and fair minded chap/chappess. I bet if you were a politician you'd claim your original reason for invading a country was regime change after you failed to find any weapons of mass destruction.
P.S. Is this the right room for an argument? LOL
32. letthemfall said...
Oh do give over pdoff. This is what I said:
"the real issue is inequality of wealth"
This is the same thing as some benefiting unfairly - that is inequality surely. You can split hairs if you wish, but I am not changing my argument at all. As for who I'm knocking it's not so much individuals - or at least no more than I knock greed and avarice - but the system that allows such activities to confer great benefit at the expense of others.
33. doomwatch said...
Back to the actual article. The main point to take away is that people who derive a living from doing up properties
and selling them for profit, are doing so to derive an "income". The HMRC has decided that owning an asset and selling it
for a profit (not that there will be one now the 2nd phase of the crash is upon us), should be deemed as income. Presumably
they should, in fairness, apply the same rule to all other assets e.g. shares, bonds. Oops, another HMRC daft idea then !!!
34. p. doff said...
29. letthemfall said...''Oh do give over pdoff''.
Aha, so this IS the right room for an argument.
Yes, but you originally said "the real issue is inequality of wealth", and ''they are seen to have benefited unfairly'' which you went on to define as ''acquired more wealth than the value they have created''. You then changed this to ''acquiring wealth at the expense of others,'' which is obviously not the same thing.
Anyway, I'm not allowed to argue anymore unless you pay :-)
35. letthemfall said...
pdoff
I think it is the same thing. If you take more bread than you've baked, someone else must give up their loaves.
Too much Monty Python watching there.
36. 51ck-6-51x said...
Braindeed said, "The distortion on the supply side means that the demand on the other side is 'pent-up' or more honestly choked. Housing is a basic human necessity ..."
- I think the mistake in your analysis is that you infer from "Housing is a basic human necessity" that "Home ownership is a basic human necessity", which is not so. If we were all renters off competing landlords would there be any less supply of housing? [rhetorical]
Although I agree with your sentiment that externalities should be paid* by any and all property owners.
* or, more preferably be priced and then paid directly thus avoiding this whole tax malarkey (I can dream).
37. rumble said...
mr magoo, "your bile should be directed against those who elected by us, paid for by us, protected by us, who have in the last decade become our masters and not leaders"
crunchy, "What's new in the world of unregulated false slavery. Some must prop up a failed system at all cost"
-- hear, hear.
38. robh said...
In the moral BTL discussion, might it not be moral to BTL and keep empty just for capital gain. This is neither an investment in production or a service. Purely speculation. As mentioned before, a speculation that does affect others
39. braindeed said...
. 51ck-6-51x @ 36said..
I think the mistake in your analysis is that you infer from "Housing is a basic human necessity" that "Home ownership is a basic human necessity", which is not so.
I never inferred that "Home ownership is a basic human necessity".
I would say that home ownership is preferable to renting, insofar as the tenancy rules for short hold tenancies do not promote stability or a feeling of ‘Home’ – I could go further and say that I believe that the benefits of home-ownership should not just be measured in monetary terms -but that would be to invite a blizzard of obtuse invective advocating otherwise…of course, for some the idea of owning a home is a bridge too far.
I take it there is no dispute about the 2million mark – then how could it not choke off the supply side? So perhaps you are saying that not all of the 2m BTL properties in their ‘portfolios’ would have been free to buy all through the build up to that mark? Again I’d suggest that, if people can’t buy, they’re obliged to rent…..so the concept that the BTL’s are providing a ‘service’ falls back to the notion that they helped cause a shortage of affordable property for those same (reluctant) renters to buy in the first place. Not so much chicken and egg, as chicken and fox.
In my opinion, BTL’s are morally vacuous at best, downright cynically exploitive at worse. But we don’t have a major party that agrees
40. luckyjim said...
This change simply means that property development becomes less viable.
I know property developers are 'the enemy' surely we should be encouraging people to bring derelict houses back on to the market ? Befrore we tear up the green belt say ?