Judicial Review – Landlord Tax Grab

Judicial Review – Landlord Tax Grab

1:00 AM, 26th December 2015, About 7 years ago 280

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Landlord Tax – George Osborne Policy To Face Judicial Review.

Private Buy-to-Let housing providers have chosen Boxing Day 2015 to begin their fight back at Chancellor George Osborne and his discriminatory tax regime, announced in the Summer Budget, which only targets private landlords with mortgages via the Judicial Review process.

New tax rules will treat mortgage interest as though it is earned income and push many rental property owners into higher tax brackets. Knock on effects can also include increased CSA payments and removal of other vital benefits but Osborne’s tax measures will not affect the wealthiest landlords (those with no mortgages), or indeed limited liability companies which borrow money to fund buy-to-let property investment portfolios.

Social Media has been buzzing in recent weeks calling for legal action to be considered.

The first step to instigating a Judicial Review is to obtain a detailed Legal Opinion from specialist legal counsel. Omnia Strategy LLP, established in 2011 by Cherie Blair CBE, QC, has been appointed.

The organisers of the campaign have launched a fund-raising appeal via the Crowd Justice website. Thousands of landlords are expected to donate funds.

Letting Agents and Mortgage Brokers are also being encouraged to contribute to the fund raising campaign. This is because their businesses are likely to be hit too if landlords stop investing or choose to sell up.

A member of ICAEW commented;

It is a long established principle of taxation that expenses incurred wholly and exclusively for the purposes of the business are deductible when calculating the taxable profits. Clause 24 of the Summer 2015 Finance Bill contravenes that principle and will result in proprietors of property businesses being liable to tax on a fictitious profit – even if the proprietors really make a loss.

The tax change does not just affect new borrowings. Landlords with existing borrowings will be affected. Portfolio landlords will be particularly badly hit.

As a consequence of the tax change, major changes in the private sector will take place. Some landlords will pass on their increased tax by increasing rents. Others will be forced to sell, as they will not be in a position to pay the extra tax demanded by HMRC. Homelessness will increase as some tenants will not be able to afford higher rents and many will be evicted by landlords forced to sell”.

Mark Alexander, founder of the Property118 Landlords Forum said “it is important for the whole country that funding is raised to win this legal battle. Millions of Britons simply do not qualify for mortgages to be able to purchase a home of their own. The number of people seeking to rent privately has been increasing in line with the growth of the population for decades. It is all very well the government having an ambition for everybody to be a homeowner but they must be made to realise that isn’t realistic. The UK has an ever growing reliance on the Private Rented Sector. Investment and building needs to be encouraged, not taxed into oblivion”

In a letter to the Chancellor, Conservative Lord Flight saidA lot of Buy to Let investment has been an alternative to saving for old age via pension schemes.  Up until World War II investing in rented property was the main method of providing for an income in old age.  Given the poor performance of the Stock Market over the last 20 years, it is hardly surprising that many people have opted for Buy to Let investment as an alternative source of retirement provisioning.  But Buy to Let does not enjoy any of the major tax advantages of pension saving, i.e. tax credit on the amount invested and accumulation of income and capital gains tax free within the pension scheme.  The only Buy to Let “tax advantage” has been the ability of the interest cost to be offset against an individual’s income to determine their tax rates/bill – the very thing which you have attacked.”

When Lord Flight referred to offsetting the interest cost against an individual’s income he of course meant rental income only, not total income.  Buy-to-Let interest is not deducted from any other income that a landlord might have – unlike the way MIRAS used to work.

Nor can Buy-to-Let losses be set off against any other income.  A BTL property has to pay its own way.  If it gives rise to a loss, the owner has to make good the loss out of other taxed income.  Landlords do not receive any tax “breaks”.

BTL has increased housing stock by 2.5 million between 1996 and 2013.

BTL was only responsible for one-twentieth of the 150% price increase between 1996 and 2007, which is insignificant.  Prices would have gone up even more if BTL had not financed the 2.5 million increase in supply – and so would homelessness.

Deducting finance costs from rental income is not a tax relief it is normal accounting practice everywhere, and for every business. That is why Lord Flight put “tax advantage” in inverted commas.

Disallowing finance costs for existing rental businesses is iniquitous and will be damaging for the economy.  Rents will rise.  Tenants who cannot afford the rises will be made homeless, to be put in temporary accommodation in whichever part of the country it can be found, at greater cost.

For these reasons, it is vital for private landlords, tenants and the entire rental sector that this funding campaign is successful.

The window of opportunity to submit an application for Judicial Review closes on 17th February 2016.

The Crowdfunding website page for making donations to the legal action fund can be found via a Google search for “Crowd Justice Judicial Review of Clause 24” or CLICK HERE.

Further information link

JUDICIAL_REVIEW



Comments

Steve Bolton

20:20 PM, 24th March 2016, About 6 years ago

JUDICIAL REVIEW - IMPORTANT EASTER UPDATE

We have spoken with our lawyers who have drafted an initial reply to the acknowledgment of service received from HMRC and HMT. This will be sent to the courts next week.

We then await the courts ruling, which we hope will give us the chance to fight our case fully and have our day in court.

In the meantime we are working on our next Crowd Funding campaign, which we expect to go live in early April (see link below for a reminder of our first campaign). We will need to raise more funds to take this all the way to court, which is the only chance we have of winning the battle and getting this law abolished.

In the meantime, please block out Friday 10th June in your diary...

We are planning a very big and very important event on that date in London. We believe that it is time for large numbers of landlords to come together and stage a fight back, which includes but is not limited to the Judicial Review.

A venue for up to 800 people has been reserved, some key speakers have been booked and our aim is to help educate, inform, inspire and collaborate in a manner that our sector has never seen before.

We would love to have your support, attendance and ideas, to create positive and lasting action before, during and after the event itself.

All ideas welcomed - please comment below.

Happy Easter to one and all,

Steve Bolton and Chris Cooper

https://www.crowdjustice.co.uk/blog/entirelybonkers/?utm_content=28178805&utm_medium=social&utm_source=facebook

Richard Mann

11:11 AM, 26th March 2016, About 6 years ago

Reply to the comment left by "Steve Bolton" at "24/03/2016 - 20:20":

Hi Steve and Chris,

I for one would be more than happy to attend and lend support to the day that you have planned. Please feel free to contact me regarding this. As Mark Alexander provides this amazing platform for communication that is specific and packed with professional individuals offering help and support I would offer my own humble opinion for thought and consideration.
It seems to me that newspaper and media outlets have to be made aware in a neutral and sympathetic way of the potential catastrophic fallout and repercussions that the implementation of the Tory Clause 24 Tenant Tax will have on all tenants throughout the country.

In order to effectively deliver such information it will need to come from a publicly recognised individual or possibly an extremely well qualified individual or institution. ( Just thinking out loud, would Cherie Blair work? ) Would an individual with a proven compassionate profile help the potential plight that millions of tenants will suffer?

With some hard facts and pertinent delivery could it be one of the following?
Professor in the relevant field?
Religious Leader?
Politician ?
Councillor ?
Economist ?
Existing tenant ? A promoter of tenant issues?
Existing lettings business individual ?
Equal rights Campaigner ? Tory Tenant Tax why it just does not work for example ?

Neutralising the negative promo machine that has fuelled such anger against individuals that own and operate lettings business's has to be carried out calmly, rationally, with full explanations and outlines.
Its important to give opinion based on fact on the projected potential measurable devastating effect on the poorer members of society that the Tory Tenant Tax will inevitably have.

Would our communities be better off with large financial institutions pouring cash into Buy to Rent Out, manipulating the local economies for ROI, monopolising local markets, creating controlled Ghetto's for our young and old alike?
Do we wish to allow large institutions to control all the housing that is available and enjoy all the tax benefits that their "lettings business" can attract?
Is the Tory Tenant Tax designed to force the working class, poorly paid, the not so rich and the more vulnerable in our society into monitored and controlled blocks of living units in order to extract as much as possible from them, while at the same time diminishing the opportunities they have to self improvement and escaping the poverty trap.
Does this manoeuvre align itself with the increase in university fee's, after all extortionate university fees help to dumb down the nation encouraging, actively developing a life of servitude.
Does the Tory Tenant Tax also align itself with the relaxing of or in some cases abolishing of the commitments to allowing for social housing within new developments? Does this support the Tory proposals to pull down the Council estates...particularly if they are in really cool and upcoming areas to then sell off to (chums?) organisations that can develop land?

How many Lettings business owners are there?
What potential vote do they carry? Which parties clearly support the Tory Tenant Tax that they call clause 24?
Can an allegiance with a more compassionate group of individuals prove to be mutually beneficial and fairer?
Is the Greens ? Is it the Monster Raving Looney party? whom so ever it shall be, they need to be made aware of your planned event.

The wider picture what is it? The short answer is no one knows, there is nothing in the Tory manifesto so I am lead to believe, I have not read it, that looks at the potential "nice little earner" ( Arthur Dailey ) that the Tory Tenant Tax may generate.
As Gideon Coke head ( By admission ) Osborne "GO" for short appears to dream up all kinds of ridiculous new strategies the whole country is waiting often with baited breath at the next public schoolboy joke idea to fart its way out onto the poor working class and non Tory voters.

Just how legal is it for Gideon to even enforce such change ?
Can you tax one sector indiscriminately into non existence ?

There is so much more to say...enough for the moment...

The Tenant Tax that is being forced onto the market by Clause 24

Miascot

23:34 PM, 26th March 2016, About 6 years ago

Hi Steve

Thanks for all your efforts, so pleased you guys are fighting for justice!

How about a crowd funding exercise to raise money for constant newspaper adverts in an array of papers spelling out the facts and raising awareness throughout society!

It is clear we cannot rely on free unbiased publicity so we need to start paying for it before it is too late!

Pretty sure huge amounts will be contributed by the readers here to kick off the campaign! the more people (including tenants) that learn of our our plight, the more money that will be raised - we could perhaps aim for some TV adverts similar to the pre election party political broadcasts.

Richard Mann

9:49 AM, 27th March 2016, About 6 years ago

Reply to the comment left by "mia scot" at "26/03/2016 - 23:34":

Great idea !
Tory Tenant Tax? No thanks Gideon !
Vote them out

Dr Rosalind Beck

22:50 PM, 13th April 2016, About 6 years ago

Okay, everyone. Important message from Steve Bolton and Chris Cooper. The next stage of the funding of the legal challenge against the Government begins tomorrow. This is the time for us all to put our money where our mouths are. Also, it is important to circulate this to everyone you can think of. I would wait until it is up and running, which I believe should be around mid-day tomorrow. Then help it to go viral like the last time. We are hoping that people who donated before will donate again - you will see that donations over £100 entitle the donor to a ticket at the summit: 'Tenant Tax - Landlords Fight Back', on the 9th of June, which will be a brilliant event and also mean that a lot of us can meet up with each other for the first time in many cases.

This is the link to the funding site:

https://www.crowdjustice.co.uk/case/tenanttax/?utm_source=CrowdJustice+Donors&utm_campaign=fa149ef96d-160413_Clause24&utm_medium=email&utm_term=0_a437a384c1-fa149ef96d-123340017

Gareth Wilson

15:20 PM, 16th April 2016, About 6 years ago

The battle lines are being drawn for what is going to be the rental sector's WATERLOO. Now it is time for the people of Britain to unite against the Tenant Tax and scapegoat politics of George Osbornaparte.

Say No to George's rent hikes and evictions! Say No to the Tenant Tax! DONATE and SHARE now!

https://www.crowdjustice.co.uk/case/tenanttax/

Ian Simpson

5:04 AM, 27th August 2016, About 6 years ago

Why have there been no further comments on here for four months , and what is happening with this review...?

Ian McKean

18:02 PM, 18th April 2017, About 5 years ago

Reply to the comment left by "Ian Simpson" at "27/08/2016 - 05:04":

Good question.What IS happening with this Judicial Review?

Mark Alexander - Founder of Property118 View Profile

18:17 PM, 18th April 2017, About 5 years ago

Permission was denied, its dead in the water.
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