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Mr Yogi

Btl Fraud

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The scandal of developers' discounts on multiple purchases of new build flats not being declared either to the mortgage lender or to the Land Registry is finally getting some attention, following the 'File on Four' radio programme on Monday night.

I've been giving it some thought.

I can't imagine the police being particularly keen on getting involved in a widespread fraud like this. It would swallow up man-hours and resources on what they would view as fairly minor offences.

Surely it's a job for HM Revenue & Customs.

When a BTL investor sells a property they will be liable to tax on the profit made. What are the profits going to be based on, the full purchase price or the discounted one?

My guess is that pretty well everyone will try to use the full purchase price in order to minimise their tax liability.

Surely HMRC should be going into the offices of all developers and demanding full details of all the discounts they have given to investors over the last ten years. They have the powers.

If nothing else, the discount itself is surely liable to tax. I wonder how many BTLers have actually declared it?

The taxman should be unleashed on this sector without delay.

Police action should be reserved for the bent solicitors and surveyors who colluded in this fraud.

Edited by Mr Yogi

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So basically even if new builds drop 15% that is still the same as 0%

Not if you are an owner-occupier suckered into paying full-whack by fraudulent Land Registry valuations

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Or cashback schemes - In West Yorkshire they have been converting old mills at a rapid rate into flats - I drive a couple on my way to work - they are starting to offer £15,000 cash back or mortgage paid for 18 months. Its all just one big scam and should be legislated against.

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Not if you are an owner-occupier suckered into paying full-whack by fraudulent Land Registry valuations

I don't think many people paid full price for new builds. They always come with a discount unless they genuinely are in a very good area.

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The scandal of developers' discounts on multiple purchases of new build flats not being declared either to the mortgage lender or to the Land Registry is finally getting some attention, following the 'File on Four' radio programme on Monday night.

I've been giving it some thought.

I can't imagine the police being particularly keen on getting involved in a widespread fraud like this. It would swallow up man-hours and resources on what they would view as fairly minor offences.

Surely it's a job for HM Revenue & Customs.

When a BTL investor sells a property they will be liable to tax on the profit made. What are the profits going to be based on, the full purchase price or the discounted one?

My guess is that pretty well everyone will try to use the full purchase price in order to minimise their tax liability.

Surely HMRC should be going into the offices of all developers and demanding full details of all the discounts they have given to investors over the last ten years. They have the powers.

If nothing else, the discount itself is surely liable to tax. I wonder how many BTLers have actually declared it?

The taxman should be unleashed on this sector without delay.

Police action should be reserved for the bent solicitors and surveyors who colluded in this fraud.

This is hugely significant. In the current market such practices could easily stop the indices from turning negative (cf Nationwide).

B**tards

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The data is already available to do this fairly simply as you point out.

Developers must hold details of all sales/prices, including cashbacks etc.

LR holds details of recorded sale price, used to calculate stamp duty.

LR hold details of any re-sale recorded prices.

IR holds details of buyers earnings/declared income.

Any seller that notifies the IR of the LR price paid in order to reduce his cap gains liability should stand out like a sore thumb when it is cross-checked against the developers sales record.

Presumably the cashbacks etc should have been declared as un-earned income and subject to tax or else the discounted price should have been notified to the IR and thus used to calculate cap gains liability. Buyer can't have it both ways.

I'm not sure that the IR will be bothered to carry out these checks though. If they did, all they need do is ask all developers over a certain size for details of each sale transaction for a certain period, check it against the LR details and then write to each buyer. Fairly simple I should have thought.

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In West Yorkshire they have been converting old mills at a rapid rate into flats - I drive a couple on my way to work

Something that big must be a nuisance to other road users

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Ok, so how do we persuade the HMR&C to investigate?

Can we indentify any candidates from the LR figures? i.e. bought off-plan from developers we know gave discounts and then sold quite soon at an equal or higher price?

Isn't there an anonymous grass-up telephone numbers for HMR&C?

This might keep them occupied long enough to not spot that LCD TV I bought through my Ltd. Co. as a "computer monitor".......

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I can supply a development if someone wants to run with this. Currently unable to go so myself as recovering from a road traffic accident.

Looked at a development in Surrey. 3 flats for sale. Checked land registry prices for one and current asking price LESS than the sold price registered.

Estate Agent says that there was some sort of cashback fraud.

Outside of the block is festoned with for sale/to let signs.

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Nice one. Got any more details of the development?

I've just sent and email to my MP, feel free to cut and paste and do the same, a question asked in the house would be hilarious!

""""""""

I don't know if you heard this week's "File on Four" programme on Radio 4 (it's available on their website if you missed it), but it was an extremely worrying report on the issue of people being encouraged to lie on "self-cert" mortgage applications.

What was particularly worrying was the practice of some buyers, mainly landlords, of buying newly built flats at a discounted price but not informing the bank or the Land Registry of the discount.

It struck me that the landlord would then be able to defraud the Inland Revenue of capital gains tax if he/she then sold the property at or above the discounted price. So for example, a flat sold at £200k with a 15% discount actually sold at £170k. If it were subsequently sold at £200k, the landlord has defrauded the Inland Revenue of tax on £30k of capital gains.

Do you know whether the Inland Revenue are investigating these cases? I have tried contacting them directly but they do not take general queries of this nature.

""""""

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I think this is a perfect candidate for a petition to Downing street... online, of course.

My reasoning:

Brown has just had some embarrassing deficit figures - if this could be spun as tax fraud, it stands to Brown's advantage to insist the Inland Revenue collect it.

I've never signed a petition in my life before... I'd sign that one.

The petition could read something like:

--

We the undersigned insist that government ensures the Inland Revenue enforces current legislation regarding capital gains tax on windfalls arising from property investment.

--

It might look like a good short-term idea for Brown to do this - and seem to be on top of criminal activity. It also plays on selfishness among other property investors who have not yet had a windfall. I can't see it loosing any votes. It also employs a bit of double-think... Labour could even spin it as necessary because the housing market is so buoyant...

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It would also tie-in with the report earlier this week (?) that HMRC are clamping down on IHT by investigating the bereaved. One would imagine if they are prepared to track down families for undeclared IHT, they should be more than prepared to investigate developers/BTLers for willful evasion.

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It would also tie-in with the report earlier this week (?) that HMRC are clamping down on IHT by investigating the bereaved. One would imagine if they are prepared to track down families for undeclared IHT, they should be more than prepared to investigate developers/BTLers for willful evasion.

VERY interesting - and relevant to me personally... Do you have a link?

I think that there is substantial revenue in CGT from property flippers who have been extremely active this past few years... I've the name, address and bank details of one person who would probably prove fruitful. :-)

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VERY interesting - and relevant to me personally... Do you have a link?

I think that there is substantial revenue in CGT from property flippers who have been extremely active this past few years... I've the name, address and bank details of one person who would probably prove fruitful. :-)

http://www.telegraph.co.uk/news/main.jhtml...ninherit121.xml

Emphasis appears to be on the 7yr gift rule.

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Nice one. Got any more details of the development?

I've just sent and email to my MP, feel free to cut and paste and do the same, a question asked in the house would be hilarious!

""""""""

I don't know if you heard this week's "File on Four" programme on Radio 4 (it's available on their website if you missed it), but it was an extremely worrying report on the issue of people being encouraged to lie on "self-cert" mortgage applications.

What was particularly worrying was the practice of some buyers, mainly landlords, of buying newly built flats at a discounted price but not informing the bank or the Land Registry of the discount.

It struck me that the landlord would then be able to defraud the Inland Revenue of capital gains tax if he/she then sold the property at or above the discounted price. So for example, a flat sold at £200k with a 15% discount actually sold at £170k. If it were subsequently sold at £200k, the landlord has defrauded the Inland Revenue of tax on £30k of capital gains.

Do you know whether the Inland Revenue are investigating these cases? I have tried contacting them directly but they do not take general queries of this nature.

""""""

At first sight this looks like both mortgage fraud and tax fraud. However, I would be a little surprised at the former since lenders usually carry out their own valuations to stop this sort of thing. In fact they were very hot on the subject during the last HPC. Maybe things have got very lax again during the current round of HPI.

Edited by up2nogood

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The discount wouldn't be taxed as earnings when received as it relates very clearly to the purchase of a property and therefore forms part of the price of the asset being purchased. Consequently the net price should be used in the CGT calculation - if anyone used the gross price then they'd be misdeclaring their taxable income and it would therefore be a matter for HMRC.

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The discount wouldn't be taxed as earnings when received as it relates very clearly to the purchase of a property and therefore forms part of the price of the asset being purchased. Consequently the net price should be used in the CGT calculation - if anyone used the gross price then they'd be misdeclaring their taxable income and it would therefore be a matter for HMRC.

There was a post on here a few weeks ago from a solicitor if my memory serves me correctly, which related to a newbuild sale where the price notified to the LR, and upon which stamp duty was paid, was the pre-discounted price. This is allegedly a widespread practice.

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Right then, I've created a petition on the sub-Prime Minister's website. Once I've got the confirmation email back, I'll post the link for us all to sign it.

If I have to pay bloody taxes, so can my f*cking landlord!

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I think that there is substantial revenue in CGT from property flippers who have been extremely active this past few years... I've the name, address and bank details of one person who would probably prove fruitful. :-)

Flippers are in danger of HMRC charging the gains to Income Tax rather than CGT.

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Ok, so how do we persuade the HMR&C to investigate?

Can we indentify any candidates from the LR figures? i.e. bought off-plan from developers we know gave discounts and then sold quite soon at an equal or higher price?

Isn't there an anonymous grass-up telephone numbers for HMR&C?

This might keep them occupied long enough to not spot that LCD TV I bought through my Ltd. Co. as a "computer monitor".......

Sorry to spoil the party but I think you are all under the very mistaken belief that HMRC have the remotest interest in persuing individuals committing tax / VAT fraud.

The role of HMRC is to persue RELENTLESSLY employees on PAYE who recieved £12.50 over payments in child tax credits, or £3.75 unpaid tax on a mileage claim

I grassed on a local ner-do-well close to me at the beginning of the year. I estimate his tax evasion to be in the region of £8K a year. Virtually handed HMRC a file of info. Have they done anything - you must be joking. :angry:

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Sorry to spoil the party but I think you are all under the very mistaken belief that HMRC have the remotest interest in persuing individuals committing tax / VAT fraud.

The role of HMRC is to persue RELENTLESSLY employees on PAYE who recieved £12.50 over payments in child tax credits, or £3.75 unpaid tax on a mileage claim

I grassed on a local ner-do-well close to me at the beginning of the year. I estimate his tax evasion to be in the region of £8K a year. Virtually handed HMRC a file of info. Have they done anything - you must be joking. :angry:

Several years ago I lived near this cunit who was on every disablity allowance going. He Had one of those annoying disabled stickers which entitled him to park his car virtually anywhere even if it meant gridlocking half the town. I managed to snap him riding a bike with a ladder (he had a part time window cleaning round) and repointing his chimney.

Sent this all off to the DHSS - what happened - fook all - 1 year later still window cleaning, still poncing around in his disability allowance funded nissan Micra whilst I bust my guts 5 months a year just to clear my tax bill.

Edited by Kurt Barlow

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Hi Paddles and all,

If anyone would like details of that development that a suspected fraud was done on send an email to me at

housepricecrash21@yahoo.com

I don't want to mention in in public and have the EA send me hate mail etc. I'm going to see if I can find details of some others as well.

Kindest regards,

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