The recent 2012 Budget announcements have changed the rules for Stamp Duty Land Tax in two significant ways:

1. Individuals buying properties over £2m will now have to pay stamp duty at a rate of 7% of the price of the property; and,
2. The Government has sought to alter the Finance Act so as to prevent people from ‘abusing’ stamp duty land tax ‘loop holes’

HMRC has been opposed to any party facilitating the use of a stamp duty strategy to lessen an individual’s stamp duty liability. Although there have been no hard and fast rules or laws preventing these tax strategies, they have been viewed as immoral and not within the scope of the existing legal framework. HMRC argues that individuals should not ‘avoid’ paying their fair share of their stamp duty taxes though sub-sale relief mechanisms. Tax planners have argued that they a merely utilizing the poorly and widely drafted legislation to assist their client’s in their overall tax planning. Most planners add that they rely upon robust legal opinion provided by expert Counsel and they are very open by clearly setting out to HMRC their position after every completed transaction.

The Solicitors Regulation Authority have, recently, been very active in this area by advising solicitors that they may be in breach of their Code of Conduct by placing their client’s in a dangerous position and by trying to gain from the schemes, thereby setting aside their integrity and impartialness to their client, when they seek to facilitate any stamp duty mitigation strategy. Impartial commentators appear to not agree with the SRA’s position in this area citing three considerations:

1. Tax mitigation is utilized in many areas (such as inheritance tax and company affairs) however these areas remain untouched.
2. How can a misconduct case be brought against a solicitor for assisting with reducing tax liabilities for a client purely in this area? A solicitor is under a continuing duty to advise client’s of anything within their personal knowledge that would benefit the client. To not do so would be considered a breach of that solicitor’s code of conduct.
3. If the SRA considers that facilitation of a strategy by a solicitor is inherently wrong – are firms then required to self-report such dealing under rule 10.4 of the Code of Conduct?

With the above in mind, commentators suggest that it should be purely for Parliament to investigate the issue, not the SRA, as the ‘loop holes’ come about from deficiencies in statute and law.

(Written by Nick Bunstone)

As buyers find it more and more difficult to get a foot on the ladder of the property market, so the demand for rented property increases.

There are different types of tenancies which can be given by a landlord to a tenant, affording different types of protection and security, but the Assured Shorthold Tenancy is the most frequently used tenancy agreement in the letting of residential properties. This type of agreement is also referred to as an ‘AST’ or ‘Shorthold Tenancy’.

AST’s are normally arranged for a fixed period of six or possibly twelve months, and allow the tenant to remain in the property for the fixed period. The main requirement with this type of agreement is that the landlord and tenant agree on the minimum term and amount of rent. There is no specific requirement to renew them and frequently the tenant continues to ‘hold over’ at the end of the fixed period and becomes a ‘periodic’ tenant. Whether at the end the fixed term or during the periodic tenancy the AST can be determined provided that two months notice has been given in the correct form. If the tenant fails to move out at the expiry of the notice period, the courts have an ‘accelerated procedure’ to enable vacant possession to be obtained.

There are many pitfalls to be avoided so it is essential to get advice:

• Make sure that the AST is correctly drawn up and that you are fully aware of the landlord’s and the tenant’s obligations.
• If notice to determine the tenancy has to be served it has to be in the correct form and served in the correct manner or the process will fail
• Many applications for possession fail during the accelerated possession procedure. The courts insist that they are absolutely right

We shall return to each of these in later blogs!

(Written by Jim Schofield at our Heywood Office)

An instruction has been received to deal with the gas connection to a new production park for the Royal Opera House in Purfleet, Essex comprising production workshops, where the development is to be opened by Her Majesty on 10 December 2010. Obvious priority has to be given to this high profile development otherwise Her Majesty will be ‘out in the cold’ on the day.

We are on target to complete the legal documentation involving three parties, by 15 November to enable the works to start on site and be commissioned to gas use in time for the opening ceremony.

- Stuart