Cash Side Payment as Part of a Flat Purchase


J

JJ

I am purchasing a flat, the price has been agreed at 35K, the vendor has
asked for a 5K cash side payment which would not go through the "official
paperwork" hence documented value of the sale would be only £30K. When asked
why, he said this was to avoid him paying tax!.
My first question is, is this legal?
Secondly, would this mean that I would be subject to increased "capital
gains tax" as this is a second property.
At the moment I have said that it must go "through my lawyer". If I assume
it is legal, then what is my tax situation, would that mean I am worse of
due to this? Appreciate any help.
JJ
 
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D

Doug Ramage

JJ said:
I am purchasing a flat, the price has been agreed at 35K, the vendor has
asked for a 5K cash side payment which would not go through the "official
paperwork" hence documented value of the sale would be only £30K. When asked
why, he said this was to avoid him paying tax!.
My first question is, is this legal?
Secondly, would this mean that I would be subject to increased "capital
gains tax" as this is a second property.
At the moment I have said that it must go "through my lawyer". If I assume
it is legal, then what is my tax situation, would that mean I am worse of
due to this? Appreciate any help.
JJ
Tread carefully - this could be construed as a conspiracy to defraud ( a
criminal offence).

And Yes, you could end up with an (up to) extra £2000 CGT bill through a
lower base cost.

Has the vendor done his sums right? Is there any CGT to pay - has overlooked
any tax reliefs (PPR exemption, lettings relief, taper etc)?
 
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P

Peter Saxton

I am purchasing a flat, the price has been agreed at 35K, the vendor has
asked for a 5K cash side payment which would not go through the "official
paperwork" hence documented value of the sale would be only £30K. Whenasked
why, he said this was to avoid him paying tax!.
My first question is, is this legal?
Secondly, would this mean that I would be subject to increased "capital
gains tax" as this is a second property.
At the moment I have said that it must go "through my lawyer". If I assume
it is legal, then what is my tax situation, would that mean I am worse of
due to this? Appreciate any help.
JJ
Of course it's not legal.
 

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