Workshop: Avoiding the fixtures and fittings minefield

I think at some point we have all been asked whether or not we can attribute a portion of the purchase or sale price of a property to fixtures and fittings to reduce Stamp Duty Land Tax (SDLT), or avoid the liability altogether. This is a potential minefield for conveyancers.

It is important to know the definitions of fixtures and fittings as they apply to conveyancing as a starting point to know whether any price can be attributed to them in the first instance.

A fixture is an item which has been fixed to the land so as to become part of it. As such, it is unlikely that a separate value can be attributed to them unless the seller expressly reserves the right to remove them.

A fitting, however, describes items in the property (which may be attached to it) but which the nature of it would mean that it is something other than a fixture.

This is quite a grey area. For example, a number of items may be considered to be fittings, including carpets, curtains and blinds, free standing furniture, and light shades and fittings. Kitchen white goods ?and electric and gas fires would also fall under fittings.

Itens which may not be classed as fittings are fitted kitchen units, Agas and wall-mounted ovens and fitted bathroom sanitary ware. Central heating and intruder alarm systems may also not be fittings.

Reducing SDLT

It is important, then, that the contract deals with the issue of fixtures and fittings as clearly as possible and it is important that this is done as soon as possible. Clarity in the contract can help in dealing with disputes following completion. For example, the buyer may want a warranty that items are in good condition and fit for purpose. Or, something may be removed which ought not to have been.

I was involved in one transaction where my client, the seller, removed all the light switches and electric sockets from the property because they were chrome and left bare wires exposed. The client had not indicated to me or the buyer that he intended to take the items and so was bound to reinstate them as to all involved, they formed part of the property.

The sale of fittings do not attract any liability to SDLT and therefore, it is important to give consideration to the price of any items which may have been included in the purchase price. Offsetting these sums can reduce rates of SDLT and therefore the amount of SDLT payable.

Over-valuation

Now the warning; only a true and accurate value can be attributed to any fittings included in the sale and offset against the purchase price. This means that, a price agreed between the parties is not necessarily going to be a correct value of the items in question.

Over-valuation is a fraud which can result in both the conveyancer and client liable to criminal proceedings

HM Revenue and Customs has the right to investigate claims where a purchase price has been apportioned and each case is determined on its own merits.

The Protocol Form (TA10) should be completed in all cases as a starting point for dealing with these matters and it is important for the conveyancer to check this form to establish whether any prices are payable for any of the included items.

The conveyancer should keep in mind the differences between fixtures and fittings and advise the client accordingly if they can or cannot ask for additional monies for items. If your client approaches you at the end of the transaction about adjustments to the purchase price, be wary.

It is not the conveyancers role to know the value of items but some common sense should be applied and it may just save you and your client a lot of trouble.