Housing associations consider legal challenge to Inland Revenue with NHF support
London-based housing associations are considering a legal challenge to the Inland Revenue's power to collect lapsed stamp duty.

The group is led by Genesis Housing Association and has the National Housing Federation's support. The registered social landlords hope to challenge guidance issued in June by a high-ranking judge that means RSLs across England and Wales could face huge bills.

The problem arose when a judge ruled in a number of cases at a west London court that the 1891 Stamp Act should be applied (HT 20 June, page 10). This act means a court can request that duty of 1% is paid on almost all tenancy agreements made before March 2000 before the agreement can be terminated.

The law was largely forgotten by tenants and landlords, so stamp duty has not been paid on most agreements and RSLs in areas with high rents could have to pay out up to £1m.

Genesis already faces a bill of £2m as it has a large amount of unpaid stamp duty on the 2600 units of temporary homeless housing owned by its West Hampstead subsidiary.

Network Housing Association, Ealing Family Housing Association and Notting Hill Housing Trust are among the other associations likely to be hardest hit by unpaid stamp duty bills.

David Golten, solicitor at lawyer Trowers & Hamlins, said guidance issued by Lord Justice May after the west London cases meant courts had to consider inadmissible any unstamped documents submitted by an RSL in a repossession case. He said: "This will result in cases being adjourned or even dismissed", meaning even more costs for RSLs.

National Housing Federation policy officer Bob Wilson said: "What [Lord Justice May] has done will throw open the can of worms to a lot more of our members."

The NHF is waiting for the outcome of a legal challenge to the Inland Revenue's position (HT 5 September, page 14). It seems unlikely that there will be much movement here, paving the way for the group of London RSLs to take up the case with the taxman.

Golten said any case would have to centre on the Inland Revenue's "artificial distinction between a tenancy expressed to be for a week and a tenancy expressed to be weekly" – stamp duty is charged on the latter but not on the former.

Source

Housing Today