So another World Cup match ends in penalties with the Netherlands suffering the curse of the English in last night\u2019s game against Argentina, and I suppose it was almost inevitable that both teams would play a cat and mouse game after seeing what\u00a0Joachim Low\u2019s men\u00a0did to both Brazil\u2019s national team and its national pride the previous night.<\/p>\n
And I can\u2019t help thinking that\u00a0penalties (of the fiscal kind) will be another inevitability for the future given the UK Government\u2019s recent announcements to “Low”er (Sorry, I couldn’t resist that) the threshold for reporting Enveloped Dwellings from \u00a32,000,000 to \u00a3500,000.\u00a0 This is part of the relatively new Annual Tax on Enveloped Dwellings regime (\u201cATED\u201d)<\/p>\n
In outline terms, the ATED rules require that high value residential property held within a corporate (or non-natural person) structure will be subject to a number of measures to combat anti-avoidance.\u00a0 These range from a higher rate of Stamp Duty Land Tax (SDLT) (15%) to the Annual Tax itself,\u00a0assessed by reference to the valuation band in which the property sits.<\/p>\n
In fact,\u00a0\u201cassessed\u201d is the wrong word to use here because the ATED tax is actually based on self-assessment. \u00a0It is up to the taxpayer, in this case most likely the property owner, to assess their liability and submit a return accordingly. \u00a0Now the vast majority of my clients will be eligible for one of the various reliefs on the basis that they are either letting the property or developing it for resale, so does that get them off the hook?<\/p>\n
Well, yes and no. \u00a0Whilst they’ll have no tax liability they still have an obligation to file the return and that’s where penalties could come into play. \u00a0Furthermore, the return appears at first glance to be an annual return but there is in fact an additional obligation to submit an ATED return 30 days after acquiring an eligible property, or 90 days after the creation of a new property.\u00a0 It\u2019s worth adding at this point that a separate ATED Return must be completed for each individual Enveloped Property.<\/p>\n
So back to penalties.\u00a0 The ATED penalty regime is heavy \u2013 a \u00a3100 fixed penalty for being late by a day, followed by a \u00a310 per day fine for each of the next 90 days and then a further \u00a3300 once 6 months have passed and so on.<\/p>\n
But let\u2019s be practical, Enveloped Properties valued at over \u00a32m are not that common and so one could say that at present the non-compliance risk for developers and investors, who let\u2019s face it have a myriad of other things to contend with when acquiring properties or completing developments, is not so great.<\/p>\n
However, next year the \u00a32m threshold falls to \u00a31m, and the year after it falls to \u00a3500,000.\u00a0 This gives an exponential increase in the number of ATED returns required, and inevitably an increase in the\u00a0number of property owners falling foul of their filing obligations<\/p>\n
And, just like all World Cup games that end up in penalties, it will seem very unfair to those on the receiving end.<\/p>\n
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So another World Cup match ends in penalties with the Netherlands suffering the curse of the English in last night\u2019s game against Argentina, and I suppose it was almost inevitable that both teams would play a cat and mouse game after seeing what\u00a0Joachim Low\u2019s men\u00a0did to both Brazil\u2019s national team and its national pride the[…] <\/p>\n