Whoops, there go my chattels…

Agents should be aware of the outcome of a case involving Stamp Duty Land Tax and a buyer’s efforts to mitigate it by buying chattels separately.

The case, a victory for HMRC, proves that mistakenly identifying a fixture for a chattel can prove costly. It also shows that HMRC will scrutinise transactions at or near the threshold levels.

In Orsman v HMRC (2012 UKFTT227), Miss Orsman paid £250,000 for her home and £8,000 for the chattels, which included £800 for shelving in the garage which were attached via battens. On a purchase of £250,000, she was therefore liable to pay Stamp Duty of £2,500 because the property was at exactly the ‘slab’ threshold.

Had she paid £250,001 for the property, she would have had to pay £7,500 in Stamp Duty.

Her purchase was successfully challenged by HMRC. But what exactly is a chattel? A chattel is a tangible, moveable asset such as carpets, curtains and ‘loose’ white goods like fridges. A chattel is not a fixture such as fitted furniture or built-in white goods.

All HMRC needed to do was to prove that at least £1 of the chattels she had bought were in fact fixtures. A tribunal held that the garage units were fixtures and not chattels, thus landing her with a SDLT bill of £7,524 on a purchase which was raised to £250,800.

A pound note, the downfall of Miss Orsman

One moral of this case is that buyers – and indeed everyone involved in the transaction – need to be very sure about what chattels are, if they are relying on chattels to keep their Stamp Duty costs down.

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