Tag Archives: tax

London landlord who part-owned racehourses fined £200,000 for tax evasion

Rogue landlord convicted of tax evasion

A rogue landlord has received a two year suspended jail sentence and ordered to pay a £200,000 fine for tax evasion and failing to declare he was a company director.

Michael Charles Waddingham had been a director of property development firm Chantry Estates, owned 17 properties and had income of more than £100,000 per year from various directorships.

Waddingham pleaded guilty tax fraud at Kingston Crown Court on 17 January this year admitting he had failed to submit Self Assessment tax returns between 2008 and 2012.

During that time he had failed to declare his rental income and that he was the director of seven land and property development companies.  In addition to his property portfolio he was also the part owner of several racehorses and the director of a betting syndicate which is also a registered UK company.

Following his arrest in 2015, Waddingham’s accountants cooperated with a HMRC forensic accounting team to calculate that £281,000 was owed in Income and Capital Gains Tax.

Waddington paid the unpaid tax to HMRC prior to sentencing at Kingston Crown Court this month. He now has six months to pay the additional £200,000 fine in order to avoid the suspended prison sentence being realized.

Waddington was also given 200 hours of community service and a six-month curfew between 8pm and 5am, enforced with an electronic tag.

The Renters Alliance helps renters with bad landlords and letting agents. If you have a story you would like to share, please contact the National Renters Alliance through our website or email us at contact@nralliance.co.uk

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Buy to let landlords exploiting tax loophole to invest in property

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Increasing numbers of landlords are using a tax loophole to avoid buy-to-let tax changes announced by former Chancellor George Osborne in 2015.  Under the rules set to be introduced next year, private landlords face restrictions on their ability to offset mortgage  interest payments against tax bills.

However, the new rules will not apply to landlords who invest through a company rather than as an individual.  Accordingly in anticipation of the changes, 63 per cent of applications for landlord loans are now being made through limited companies, up from 21 per cent before the announcement was made. Many landlords are also setting up companies and selling their existing properties to them.

According to Chief Operating Officer Steve Olejnik of the mortgage brokering firm, Mortgages for Business, the number of landlords using limited companies will rise since it will be  “more tax efficient for the majority to buy property.”  Investors who hold properties in limited companies will continue to benefit from tax relief and will be able to write off all costs of running buy-to-let properties (including mortgages) as  ‘allowable expenses.’ Incorporation would therefore effectively circumvent the rate relief restrictions.

Furthermore, despite having to pay stamp duty at the increased rate, incorporated landlords would be eligible to pay just 20 per cent corporation tax on profit as opposed to up to 45 per cent income tax if the buy-to-let were operated by an individual.  Incorporated landlords would also benefit from more relaxed affordability checks compared with individual landlords since since lenders will take into account the fact they will still benefit from tax relief.

The increase in landlords registering as companies comes following the successive failure of legal and Parliamentary challenges against former Chancellor George Osborne’s restrictions on the amount of tax relief private landlords will be able to claim on mortgage interest outlined in last year’s summer budget.

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Buy-to-let landlord group represented by Cherie Blair loses court tax challenge

Cherie Blair Royal Court Justice landlord group

A landlord lobby group represented by Cherie Blair have seen a legal challenge to restrictions on buy-to-let tax relief dismissed at the Royal Courts of Justice today.

The landlord coalition called “Axe the Tenant Tax” was refused permission by a senior judge to seek a judicial review of tax changes announced by former Chancellor George Osborne in 2015 which are set to be introduced in April 2017. Under the proposed tax changes (Section 24 of the Finance (No 2) Act 2015) individual landlords with mortgages will be required to pay tax on turnover rather than the profit.

Represented by Omnia Strategy LLP,  the law firm  founded chaired by Cherie Blair in 2011, the group claimed that the tax changes were “unlawful, unreasonable and discriminatory” because they did not also apply to corporate landlords.

Mrs. Blair has previously claimed that the proposed tax changes would be challenged since they would “discriminate against landlords according to the European Convention on Human rights.” Speaking during today’s hearing, Mrs. Blair stated that the tax proposals would “unfairly result in cuts in income for ‘hard-working members of the public’ who had bought properties to rent in order to supplement their savings at a time when interest rates were low.”

Mr Justice Dingemans ruled that the legal challenge would fail rejecting claims that the changes would be contrary to EU legislation and anti-discrimination laws.  The judge added that the extent to which corporate bodies should be treated differently to individuals when it came to tax laws “raises political and economic questions, but not in this instance a legal one.”

In response to today’s court defeat, the landlord group remained defiant. In a joint statement lead claimants Steve Bolton, founder of Platinum Property Partners, and fellow landlord Chris Cooper claimed that the extra costs incurred by landlord due to the tax changes would be passed on to tenants through higher rents.

“We are outraged by the court’s decision. It has completely missed the opportunity to protect tenants, landlords and the housing market from the disastrous consequences of Section 24. From April 2017 the negative impact of this previously failed tax experiment from Ireland, where rents increased by 50% over a three year period, will be felt far and wide. Sadly it will be tenants who are hit hardest; they are set to see unprecedented rent increases over the coming months and years, which will be a very clear and direct consequence of this ludicrous legislation.”

Despite the failure of a previous Parliamentary petition and today’s defeat, Mrs. Blair said that the coalition would fight on and “engage with the Government” more directly over the issue.

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Buy-to-let landlord court date set for 6th October

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Buy-to-let Landlords taking the government to court to challenge tax relief restrictions will have their hearing at the Royal Courts of Justice on Thursday 6th October.

The group, led by the founder and chairman of Platinum Property Partners, Steve Bolton, and landlord Chris Cooper, seek to overturn former chancellor George Osborne’s decision to restrict the amount of tax relief a landlord will be able to claim on mortgage interest outlined in last year’s summer Budget.

The judicial review of Osborne’s proposals was financed by a crowdfunding campaign which followed a failed parliamentary petition to challenge the proposed tax changes.

Over £100,000 was raised by the pair who hired Omnia Strategy LLP,  the law firm  founded chaired by Cherie Blair in 2011, to act for them. At the landlord conference named the “Tenant Tax Summit” held in June to discuss the case,  Blair claimed that the former Chancellor’s tax changes warrant a judicial review since they “discriminate against landlords according to the European Convention on Human rights.”  Also speaking at the event was the Conservative Life Peer and former MP Lord Howard Flight who had written a letter to the Government “Why the Government is wrong to attack buy-to-let.”

Unless the legal challenge is successful, the government’s tax changes will come into effect in April 2017.

 

 

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Letting Agent MP Backs Buy-To-Let Capital Gains Tax Cut

hollinrake

The founder of the Hunters Estate agency and Conservative MP for Thirsk and Malton Kevin Hollinrake has backed a campaign by the  Residential Landlords’ Association (RLA) to reduce Capital Gains Tax paid by landlords when selling their rented home to sitting tenants.

The proposal involves an amendment to the Finance Bill currently before Parliament. Currently Clause 72 of the Bill  seeks to reduce Capital Gains Tax from 28 per cent to 20 per cent except for the sale of residential property where the rate will remain unchanged.

According to the RLA, Hollinrake is tabling an amendment to the Bill which will extend the tax cut to private landlords selling a rental property to a sitting tenant.  “Given the recent attack on the Private Rented Sector by Chancellor George Osborne…more and more landlords will want to exit the market as renting [sic] becomes financially unsustainable for them” the RLA said.

The RLA further purports that 77 per cent of private landlords would consider selling their property to tenants if the tax liability were reduced.

Hollinrake claims that the amendment will support the government’s wider home ownership agenda while at the same time offering landlords a route out of the sector minimizing their financial hit.  According to the RLA, the amendment  includes safeguards to prevent such a tax change being abused.

 

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Cherie Blair Speaks at Landlord Summit

cherie-blair changes to taxes on landlords breach human rights

Cherie Blair has spoken at an event organized by Landlord and letting agent groups seeking to overturn Chancellor George Osborne’s planned changes to mortgage interest relief for landlords. The Chancellor’s proposals, introduced in the 2015 Budget and Autumn statements, are intended to eliminate tax exemptions which the Treasury claims are not enjoyed by investors in other asset classes such as shares. Under the proposals, landlords operating as sole traders will be less able to deduct mortgage interest payments when calculating their tax liabilities.

Legal Challenge

Mrs Blair spoke at the event as council to a legal challenge brought against the Treasury proposals following the failure of a formal Parliamentary petition. The motion started by the Residential Landlord’s Association fell more than thirty-one thousand signatures short of the required hundred thousand to merit debate in Parliament. The failure to exert pressure on the Government using petitions led to a crowdfunding campaign by landlords to finance a legal challenge to overturn the Chancellor’s measures.

Judicial Review 

Acting as legal council to the complainants through Omnia Strategy, the law firm she founded and chaired, Mrs Blair claims that the Chancellor’s proposed changes warrant a judicial review since they discriminate against landlords according to the European Convention on Human rights. This gives one the right to hold one’s property in a way without unfair taxation. Mrs Blair also purports that the tax changes go against European Union competition laws by favoring large institutions over small individual investors.

Also speaking at the event was the Conservative Life Peer and former member of Parliament Lord Howard Flight who had written a letter to the Government “Why the Government is wrong to attack Buy-to-Let.”

The conference, titled the “Tenant Tax Summit” was held on 9th June at the ILEC Conference Center in Earl’s Court. Sponsorship was provided by various property investors and landlord’s organizations including Platinum Property Partners, Velvoir, the Humber Landlord’s Association and the Residential Landlord’s Association among others.

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Government Responds to Landlord’s Legal Challenge

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Two landlords at the center of a legal challenge to Chancellor George Osborne’s tax changes announced in last year’s budget have confirmed that two government departments had provided an “acknowledgement of service”.

The legal challenge to the Treasury’s tax changes was launched by two landlords, Steve Bolton and Chris Cooper, who used a crowdfunding platform to raise sufficient capital to employ Omnia Strategy, a legal firm founded and chaired by Cherie Blair, to seek a judicial review of the Chancellor’s measures.

The legal battle over the Chancellor’s proposed changes to Mortgage Interest Relief follows the failure of a Petition launched by the Residential Landlord’s Association to attract sufficient support to warrant debate in Parliament.

 

 

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Cherie Blair Legal Firm Challenges Osborne’s Buy-to-Let Tax Changes

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Omnia Strategy, the legal firm founded and chaired by former Prime Minister Tony Blair’s wife, Cherie Blair, has written a formal complaint to HMRC proposing a judicial review of Chancellor George Osborne’s restrictions of deductions of finance costs related to residential property.

The new tax changes, set to be implemented in the autumn of 2017 would limit the ability of landlords operating as sole traders to offset mortgage interest payments from their tax liabilities.

The decision to seek a legal challenge to the Chancellor’s tax changes comes as a formal petition set up by the Residential Landlord’s Association failed to reach the required number of 100,000 signatures to be considered for debate in Parliament.

The legal challenge to the Chancellor’s proposed tax measures was brought by Steve Bolton and Chris Cooper who raised £50,000 in crowd-funding from landlords’ associations to initiate a legal challenge to George Osborne’s tax changes.

Mr Bolton owns around 20 residential and commercial properties is also the founder and owner of Platinum Property Partners, a buy-to-let specialist with a portfolio worth a total of £200million. Mr Cooper is a part-time landlord who is using buy-to-let as part of his pension.

The letter to HMRC lists Miss Blair as one of two legal advisers for the claimants and bases the challenge on several purported breaches of the European Convention on Human Rights. The letter claims that the Chancellor’s measures infringe on one’s right to hold one’s property in a way without unfair taxation and may also go against European Union competition laws by favoring large institutions over small individual investors.

In it’s official response to the petition, the Government has claimed that the tax changes remove tax advantages enjoyed by property investors which are not available to those investing in other asset classes.

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Landlord’s Association Tax Petition Fails to Gain Support

Reverse-the-planned-tax-relief-restriction-on-individual-landlords-PetitionsA move by a landlord’s organization, the Residential Landlord’s Association to overturn Chancellor George Osborne’s changes to landlord tax exemptions suffered a serious blow as its Parliament petition failed to attract sufficient support.

The petition, “Reverse the planned tax relief restriction on ‘individual landlords’” expired today without  reaching the required number of 100,000 signatures necessary to be considered for debate in Parliament closing with only 60,894 signatures.

Begun six months ago, the motion sought to challenge Chancellor George Osborne’s reduction of Mortgage Interest Relief announced in his 2015 Summer Budget and Autumn Statement.  However, enough support was obtained to warrant an official statement on the topic whereby the Government rejected claims that the proposed tax changes were unfair. In it’s response the Government added that the tax amendments were partly intended to reduce the tax advantages offered to property investors which were not shared by investors in other assets such as shares. The Government also claimed that only 18 percent of landlords are expected to be affected by the changes which are to be introduced gradually over four years beginning in 2017.

The petition’s sponsors, the Residential Landlord’s Association claimed that the tax changes were unfair and likely to result in higher rents for tenants as landlords seek to offset higher costs by increasing rents.

It is understood that some landlord groups are now seeking a judicial review of the Chancellor’s tax changes.

 

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Landlords Take Court Action as Parliament Petition Fails

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Two property developers, Steve Bolton, Chairman of Platinum Property Partners, and Chris Cooper are have raised £50,000 through a Twitter crowdfunding campaign to challenge Chancellor George Osborne’s planned tax changes for landlords. Under the Chancellor’s proposals, landlords operating as sole traders would no longer to be able to claim Mortgage Interest Relief when calculating their taxes.

Bolton and Cooper began fundraising towards the end of a Parliamentary Petition launched by the Residential Landlords Association titled: “Reverse the planned tax relief restriction on ‘individual landlords’ which argued that the Chancellor’s plans were unfair to private landlords and may result in higher tenant rents.

The Residential Landlord’s Association petition attracted 60,894 signatures, well short of the required 100,000 necessary for the motion to be considered for debate in Parliament which may leave Court action the only option to challenge the proposed tax changes. The motion did however receive enough support to merit an official response from the Government reiterating the Treasury’s support for implementation of the Chancellor’s measures.  In its response the Government claimed that the tax changes were fair and merely removed tax exemptions for property investors which are not enjoyed by those in other asset classes.

Speaking about the Chancellor’s plans, Bolton stated “It’s not clear why the government has chosen to just launch an attack on buy-to-let owner-operators with mortgages. It’s a tax from Alice in Wonderland – truly absurd and divorced from real life. Not only is this tax grab unfair, undemocratic and underhanded, but we believe that it could also be unlawful.”

It is believed that the pair have sought legal advice matter from Omnia Strategy, a legal firm founded and chaired by Cherie Blair.

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