stamp duty - just wondering

grumpytrousers

Over a few pints Saturday night, and 'cos i'm such a happenin' kinda dude, the discussion of stamp duty came up. As it does. What with the lack of it flowing into the govt coffers and so forth. We came up with a scenario and neither of us were sure where it would go. I reckoned now was *not* the time to be playing silly buggers with the Revenue

Say Tom wants to buy land from Mr A and it's costing €150,000, then he'd be looking at paying full whack, 9%, Stamp duty.

However, if himself and his wife went and bought half the land each (lets assume there's two equal size fields in it) for €75,000 there's a saving there, cos they'd each only pay at 4% on each

My point was that these transations, if they went ahead at the same time, would be related, and that the Revenue would take a dim view of this. My mate, who's a bit of a chancer, reckoned that it's all kosher. Of course, if you're acting for the vendor, in a sense, it doesn't matter a feck to you, but would you want to be party to somebody else trying to pull a fast one? I mean, you just KNOW that within 6 months the married couple would have everything in joint names!

I think we hit that fine line between 'it's legal but it's still avoiding the Duty'. Anybody got any thoughts?

Jo King

First off is Mr A willing to deal with his land in two halves with no mention in the contract of the other deal? If the contracts cross refer then the purchase is goosed. If there is noi link between the contract what happens if one goes ahead and the otrher does not. In a situation such as described above the Revenue would want the higher stamp duty if they knew about it. The characteristics of the land would also lend themselves to a view as to whether the transaction was artificial. If either piece of land is not viable on its own, eg only one entrance onto the road it is hard to see how this transaction would not be impugned. It would also require extra legal work in the conveyancing and the solicitors would be at risk of being found to have conspired to defraud the Revenue.

grumpytrousers

We didn't go into *that* much detail Jo; it was late, the Smithwicks was flowing!

For the sake of argument, though, I guess what we envisaged was, I dunno, two fields abutting onto a public road; neither 'requires' ownership of the other and they'd function as two independent parcels of land.

My gut feeling was, as i say, that it'd be a bit whiffy. I think my cute hoor pal would be cute enough *not* to mention in contract A that there was a contract B at all, nor that the sum total of the contents of Contracts A & B were the entirety of the folio.

Jesus, I KNEW we should have just gone onto Jaegerbombs; at least i'd not remember the sodding conversation.

dats_right

It really isn't that simple. To claim the lower rate of stamp duty the purchaser would have to certify to the Revenue, inter alia, that:

"It is hereby certified that the consideration (other than rent) for the sale/lease is wholly/partly attributable to property which is not residential property and that the transaction effected by this instrument does not form part of a larger transaction or of a series of transactions in respect of which the amount or value, or the aggregate amount or value, of the consideration (other than rent) which is attributable to property which is not residential property exceeds €10,000 / €20,000 / €30,000 / €40,000 / €70,000 / €80,000.”

The question arises as to whether the proposed transaction could constitute part of a larger transaction or series of transactions, in either case the lower rate would not apply. Rather the Revenue would assess based on the total consideration payable in respect of both transactions and the rate would be set accordingly i.e. full rate. It would be imprudent to advise any further and without doubt full legal/tax advice is essential and should be sought from your solicitor/tax advisor in respect of any such transaction.


This is particularly so, as independent of any possible interest and penalties that may arise, one should also remember that section 17 of the Stamp Duties Consolidation Act 1999 (as amended) provides that furnishing an incorrect certificate for the purposes of the Act is deemed to be the delivery of an incorrect statement under section 1078 of the Taxes Consolidation Act 1997, which provides that; any person knowingly and wilfully making an incorrect statement or claiming any relief to which they are entitled are i) on summary conviction liable to fine not exceeding €5,000 and/or imprisonment for a term not exceeding 12 months, or ii) on indictment to a fine not exceeding €126,970 or imprisonment not exceeding 5 years.

nuac

Over the years I have seen some imaginative and creative proposals to avoid or mitigate stamp duty, some by eminent conveyancing counsel or distinquished accountants..

My considered advice to anyone considering any such scheme is to lie down until the feeling passes away. Play it straight with the Revenue Commissioners. If there is a genuine mistake they will be sympathetic, but if you try to pull a fast one, be afraid, be very afraid.