Anyone paid £250,000 but paid additional sum for fixtures and fittings?

[FreckledLeopard]

I'm buying a house. Have agreed a price of £250,000 PLUS £2500 for fixtures and fittings. Has anyone done similar, and have they had any investigations from HMRC, owing to the stamp duty banding and difference between 1% and 3%?

TIA.

We nearly did at a different bracket.

Your buyers will have to supply you with a very detailed list of the things included and the price you are paying. as long as its very reasonable and they have the original receipts to prove the cost then HMRC will fine.

In the end we didnt do it as DH didnt feel comfortalbe due to many reasons. As he works for HMRC he didnt want to do anything unseemly despite then costing us ££££

If the £2.5k is justifiable I can't see a problem with it. If however you are just trying to avoid paying the additional stamp duty, I wouldn't.

You will need to ensure that the items you are buying justify that amount of money. HMRC are increasingly hot on this and if they smell a tax avoidance rat - which is more likely around the stamp duty thresholds obviously - then be prepared for them to ask for proof.

We did loads of research on this and its a grey area. The amount you are paying has to be itemised, and be 'just and reasonable'. You have to make sure you are paying for chattels NOT fixtures and fittings - if you haven't done so look up the difference.

HMRC are unlikely to investigate (have nowhere near enough funds to investigate everyone they should), but if they do pick on you then they only have to prove you have overestimated the price of an item by £1 for you to move up to the 3% bracket.

Not worth the gamble for us. Fortunately once we explained the possible consequences to the vendor - that she would also be involved in any investigation, she didn't want to take the risk either. We are now paying £300 for 3 items of furniture and a few other bits, so certainly fair and reasonable.

The thing is, there are quite a few chattels, so it should be fair and reasonable. We're talking washing machine, fridge freezer, oven, four sets of tailor-made curtains and rails etc. All in impeccable condition. How, though, would they value these in terms of finding a second hand value? It's hard to say.

I would detail each of them, and a reasonable second hand cost (or new cost in the case of the curtains) and see if it adds up to £2500 before going ahead. I've known people do this, but in their case they were buying an enormous, beautifully outfitted summer house.

That sort of thing doesn't sound anywhere near £2.5k, I'd say well under 1k.

Remember it is second hand values, white goods are peanuts second hand.

look on ebay for values

Look on eBay. What you have described wouldn't actually be worth anything like £2.5k. You can't count the oven unless its a freestanding type one.

There is a case you can look at where they investigated a woman (I think in Brighton?). She was completely taking the piss but they accepted many of her valuations because she found similar items on eBay for a similar cost.

The additional problem for us is that HMRC have quite a while to investigate - so you could be hit with a big bill a year or two down the line. For us the uncertainty of it was too much.

I would also run anything past your solicitor before you finally agree to it because if they are not happy they may want you to reduce your offer or refuse to act for you if they think you are evading SD.

washing machine - £50, fridge freezer - £100, curtains and poles £300, oven prob not included if built in.

So £450 sounds more like it.

Is your solicitor happy with the arrangement?

We did paid £250 for the house and £1000 for some big furniture all antique including 3 massive walnut wardrobes, rosewood display case, Edwardian dining table plus 4 chairs, 2 book cases and a sideboard. Told our solicitor who didn't seem bothered as if anything the value was higher.

Yes. 3k for the most awful furniture and a 15 year old cooker.

The itemised list is very entertaining.

I have to disagree eith a previous poster - yes there are still people who get away with loop holes but HMRC have recruited a massive number of extra staff in the last couple of years. I have a family member who used a legitimate system to reduce stamp duty (advised by accountant) in 2009. No investigation, everything went through without a problem. Then they got a ketter about a year ago saying they were liable for all of the stamp duty, plus 3 years interest.

I agree that those items would amount to £300-400. There is no way, if you were investigated, that HMRC would equate them to a value of £2500.