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zugzwang

Hmrc Loses £50M In Stamp Duty Over Chelsea Barracks Sale

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Handsome discount for the Qatari boys.

http://www.bbc.co.uk/news/business-36397905

HM Revenue & Customs has lost its bid to recover up to £50m in stamp duty from the sale of the Chelsea Barracks in 2007.

Three Court of Appeal judges decided that the tax office had pursued the wrong party for the tax.

The purchaser, a firm owned by the Qatar Investment Authority, had used a type of Islamic finance that meant a bank actually owned the property.

HMRC said it was "disappointed" by the ruling.

"The Court of Appeal ruling supports our view that SDLT [stamp duty land tax] is payable. We are disappointed that the decision makes that tax much harder to collect so we are considering an appeal," HMRC said.

The judges' decision is likely to reignite criticism of the complexity of the UK tax system, if HMRC itself can be caught off guard. It will also expose alternative financing arrangements to more scrutiny from tax campaigners.

In the ruling, Lord Justice Lewison said there was "nothing surprising" about which firm HMRC should have pursued for the tax.

Project Blue, the investment vehicle ultimately owned by the Qatari ruling family, claimed that HMRC was now out of time to pursue Masraf al Rayan, a Qatar-based bank.

The result, and how it was arrived at, shows that HMRC needs more resources to do its job, said Richard Murphy, director of Tax Research UK.

"This needs to be a serious kicking for the people involved including the senior management of HMRC," he said. "We cannot run a tax authority on the cheap."

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How is this even possible? When you buy a house you have to pay the stamp duty on completion, or is my memory failing me.

Oh well. I suppose next time I move house and they ask for stamp duty I can tell HRMC to go whistle for it, or does it not work like that. One law for the Qataris another for the rest of us mugs.

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They've 21 years to chase up unpaid SDLT (and 8% interest) - just ask the bank for the money. If they don't pay up just take possession of the property.

[there is clearly an ambiguity on SDLT and 'islamic mortgages' - I understand that the property belongs to the bank, but surely with the current rules there would need to be a SDLT transaction on the handing over of the property at term?]

I find it odd that normal people who buy a normal house will be chased up over a few (10s of) £K, but when it comes to multimillion £ transactions they become forgetful.

Edited by dgul

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[there is clearly an ambiguity on SDLT and 'islamic mortgages' - I understand that the property belongs to the bank, but surely with the current rules there would need to be a SDLT transaction on the handing over of the property at term?

It seems like two lots of SDLT should be payable on an Islamic mortgage as the property is changing ownership twice. SDLT should be payable at the start of the mortgage when the bank buys the property from the previous owner, and SDLT should be payable again at the end of the mortgage when the mortgagor buys the property from the bank.

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It seems like two lots of SDLT should be payable on an Islamic mortgage as the property is changing ownership twice. SDLT should be payable at the start of the mortgage when the bank buys the property from the previous owner, and SDLT should be payable again at the end of the mortgage when the mortgagor buys the property from the bank.

+1

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It seems like two lots of SDLT should be payable on an Islamic mortgage as the property is changing ownership twice. SDLT should be payable at the start of the mortgage when the bank buys the property from the previous owner, and SDLT should be payable again at the end of the mortgage when the mortgagor buys the property from the bank.

That's a much more succinct explanation than the news article and the judgement.

As regards the consideration it would be like stamp duty being payable on the purchase price plus the interest on the mortgage.

I wonder how much it cost us for HMRC to pursue this through the courts? Once again the only winners are the lawyers.

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Looks like an Ijara gets special treatment - SDLT not payable on the second transaction.

But I presume that if they didn't pay SDLT on the first transaction then they get to pay it on the second.

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It seems like two lots of SDLT should be payable on an Islamic mortgage as the property is changing ownership twice. SDLT should be payable at the start of the mortgage when the bank buys the property from the previous owner, and SDLT should be payable again at the end of the mortgage when the mortgagor buys the property from the bank.

+3 .. sounds a perfect way to deal with such dodgy behavior.

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The 'Islamic mortgage' has always struck me as pretty morally dodgy. If your religion bans usury - good idea! - then I'm not sure God will buy the argument that you weren't technically charging interest - to the 'borrower' it all ends up looking pretty much the same.

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The 'Islamic mortgage' has always struck me as pretty morally dodgy. If your religion bans usury - good idea! - then I'm not sure God will buy the argument that you weren't technically charging interest - to the 'borrower' it all ends up looking pretty much the same.

It is 'allowed' because the risks are shared.

Actually, this is probably a good thing. A bit of risk-sharing would have dampened the enthusiasm of the banks to lend into a speculation-driven market.

However, there isn't really a good definition of what would happen if the risks materialised - could the buyers really walk away from the deal, say?

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