Share transfer clampdown ‘not worth it’
Wednesday 19th January 2011, 2:29PM GMT.
ATTEMPTS to close a loophole that allows share transfers as a way of selling properties to avoid document duty could be seen as an expensive waste of manpower, according to one estate agent.
Richard Fox (pictured), a director of Martel Maides, said that from a rough calculation, the sums involved might mean it would be a waste of time and effort.
A working group has recently been set up to look at tackling the problem, which would require a change in legislation.
At the moment, if a domestic property is bought the buyer pays document duty as a percentage of its value. But if a property is owned by a limited company it can be sold by means of a share transfer, thus avoiding the duty.
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If a law were to be introduced where the penalty for knowingly avoiding the document duty is set at a minimum of ten times what the rightful duty should be, payable by the perpetrator AND the acting Advocate,then there wouldn’t be a lot of Civil Service manpower required
I heard somewhere that over a third of the open market properties are company owned.That represents quite a few million in lost duty if they all changed hands over the years via share transfer
Hasn’t Alderney already got such a law in place?
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Ray – one reason that a fair few OM houses of them are owned by companies is that many are company assets, held to provide housing for non-local staff.
It would be easy to write a simple law which says that duty is payable if a company is sold and that company holds domestic property, but this would catch many companies which are not vehicles for individuals to avoid document duty.
It is not easy to simply single out the correct target.
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Terry – perhaps there could be provision in the law to only charge duty where the property occupiers are also stakeholders of the holding company? This wouldn’t catch buy to let landlords though.
I’m actually more interested to know how much “lost” revenue we’re actually talking about. Does the full article include figures?
Although I imagine it would be difficult to ascertain, surely there must be a reasonable estimate of how much potential duty is “lost” annually through these transactions? Estate Agents must have records of how many properties they ‘sold’ by this method.
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Would it not be much easier just to ditch document duty altogether and stick it on TRP instead?
Reduced fees and the resultant increased fluidity in the property market will all help lower the bar for home ownership.
Having said that, it would be a fairly humungous TRP hike. You’d have to raise the domestic TRP to about 3 or 4 times what it is as the moment, and I guess that’s not going to be popular with the asset-rich retired…
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Why do Guernsey insist on re-inventing the wheel, and spending time and money setting up yet another working group?
As usual, this idea to ‘close this loophole’ comes after Jersey have done this exact same thing. How about copying the Jersey law, and way of doing it (Land tax) and insert ‘Guernsey’ wherever it says ‘Jersey’ – should be cheap and quick!
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