Property again. Was it the duck houses that irrevocably tainted the relationship between our government and the governed in the area of property policy? Anyway, duck houses are the first things that come to my mind in connection with the idea we should reduce the administrative burden of the ATED – the annual tax on enveloped dwellings.
Because ATED is a rich buggers’ tax: it’s the “not-quite-a-Mansion-Tax” tax on houses that are owned by some kind of corporate entity to avoid Stamp Duty Land Tax. The idea is that if you and I live in a house we own and then sell it we don’t pay capital gains tax but, if the house is worth enough, we have to pay stamp duty. If we own two houses and sell one of them, well, we only get the CGT exemption (broadly) for one house at a time. So if we had to sell the estate in Scotland to finance the country house in Berkshire we’d have to pay capital gains tax on the estate (pause for hollow laughter, because capital gains tax is a notoriously voluntary tax) and Stamp Duty Land Tax. So we’d put the estate into a company, preferably offshore, and just sell the shares in the company instead, right? Hence ATED, an annual tax on “enveloped dwellings” – houses that are put into some kind of corporate ownership rather than being owned by a natural person.
In that light, the fact that the tax only started in April last year and already the buggers are wanting the “burden” of administering the tax to be eased seems preposterous to me: the condoc says upfront that the entire aim of ATED in the first place is
to discourage enveloping, to encourage the de-enveloping of property and to ensure that those who continue to hold property in this way pay a fair share of tax
The consultation also says it should be read “by those currently within the charge to ATED… those who are likely to fall within the regime in the future, ATED practitioners and representative bodies” (Pause to boggle at the thought that there are already “ATED practitioners”) Yes, I know that there are inoffensive businesses which have to claim exemption from ATED and it is, presumably, reducing the administrative burden on these which is the aim of the consultation. They are listed as:
1) property rental businesses (including preparation for sale, demolition and conversion);
2) dwellings opened to the public;
3) property developers (including exchange of dwellings interests);
4) property traders carrying on a property trading business;
5) financial institutions acquiring dwellings in the course of lending;
6) dwellings used for trade purposes (occupation by qualifying employees and partners);
7) farmhouses (occupation for the purposes of carrying on a trade of farming) and
8) providers of social housing. (2.6)
You know, I might have been persuaded that there was some legitimate policy aim in here, if I hadn’t read on, past the list of inoffensive businesses to the list of those who have already been engaged in “informal discussions” with HMRC.
They’re helpfully listed in Annex A: let’s play “spot the one whose interests most closely align with your own.”
Barratts PLC
British Land Company
British Property Federation
Burges Salmon
Cadogan
Chartered Institute of Taxation (CIOT)
Clifford Chance
Council for Licensed conveyancers
Deloittes
Ernst & Young
FTI Consulting
Grosvenor
Hunters Solicitors
KPMG
Law Society
National Landlords Association
Rawlinson & Hunter
Smith & Williamson
Stephenson Harwood
Taylor Wimpey PLC
All worthy enterprises, of course, but what about the rest of us? Isn’t this all really a bit like… asking MPs to decide their own expenses claims???
tiintax 