The government has caved in to a concerted lobbying campaign that will save housing associations up to £2m a year in unpaid stamp duty.
Local authorities, however, will miss out on the savings because they are not included in the amendment made to the Finance Bill passed this week by MPs.

The result comes almost 12 months after Housing Today first revealed the problem (HT 20 June 2002, page 10).

It centres on tenancy agreements agreed before March 2000, which technically should attract stamp duty, a fact that had been overlooked by councils and housing associations until the issue was raised by a west London judge, Nic Madge, last summer.

After this, the Inland Revenue took an interest in a potentially untapped source of taxation. The National Housing Federation calculated that the liability could run to £2m a year.

The NHF began lobbying both the Treasury and the Inland Revenue over the issue. The campaign culminated in a legal challenge, led by New Charter Housing Association. This action will now be dropped.

Bob Wilson, policy officer at the NHF, said: "This is excellent news. We had a huge amount of support from Genesis and New Charter, which allowed us to prove the importance of the issue. The case we made was ultimately irrefutable, so the Treasury and Inland Revenue had to listen."

David Golten, solicitor at NHF legal adviser Trowers and Hamlins, added that any money paid by associations could be reclaimed.

The Local Government Association has defended itself against suggestions that it has not done enough to represent its members' needs in terms of securing a similar exemption.

Ruth Lucas, senior project officer at the LGA, said: "We have been making representations on this matter, both with the Lord Chancellor's department and with the Inland Revenue.

"We are hopeful that the Finance Bill will be amended again to allow parity between councils and housing associations. We also understand that the Lord Chancellor's department is drafting a letter instructing all magistrates and courts to waive the collection of unpaid stamp duty for social housing tenancies."

Lucas said the LGA had held discussions with the NHF about its campaign, but had "decided on balance to pursue our own lines".

Source

Housing Today