Securitised vehicles could escape from Budget measures designed to clamp down on stamp duty avoidance.
Last week Treasury and the Inland Revenue civil servants are understood to have agreed to look at exempting securitised limited companies from anti-avoidance measures in the Finance Bill.
The provisions, which tax experts say would make efforts to set up this form of securitised vehicle financially unviable, have been included in the Finance Bill in a bid to tighten up stamp duty exemptions on transactions between associated companies.
The anti-avoidance provisions have been included because unlinked firms are avoiding paying tax on transactions between one another by setting up so-called ‘bridging companies’.
Increasing numbers of property securitisations have taken advantage of these exemptions in order to avoid paying the duty, which is now worth 4%, on transactions of £500,000 plus.
Arthur Andersen tax partner Patrick Cannon said many companies would be dissuaded from securitising their property if the group anti-avoidance provisions in the bill, which are due to become law next month, were implemented.
“The difference between borrowing directly and borrowing through the vehicle is often less than the 4% stamp duty charge,” he said.
“It is hoped that the Treasury will look at this sympathetically because of the potential negative effect it will have on the cost of funding.”
EGi News 08/06/00
