Legal poisition on developer holding tax money

mikemans


Joined: 12/04/2009
Posts: 103

Message Posted:
12/04/2009 10:28

Ismet,

can you tell me if a developer holds land tax on behalf of buyer, what is the legal position regarding that money. If a developer sold say 800 units and was holding say £2.5 million pound, does the developer have a legal obligation to keep the money separate from his own business as per the UK or can he do what he likes with potentially government money.



Not looking for a debate on this just facts please.

elko2



Joined: 24/07/2007
Posts: 4400

Message Posted:
12/04/2009 12:10

The fact is that when anybody collects VAT, they are supposed to declare it and pat the surplus to the tax office i.e. they have the right to deduct all the VAT they paid during the course of business and pay the surplus to the government.



We discussed at length previously about the legality of asking for VAT at the transfer of keys rather than transfer of title deeds. My belief is that the demand by the tax office for vat at transfer of keys is not legal i.e. it is not based on sound law.

ismet

Mr Vince


Joined: 24/07/2008
Posts: 696

Message Posted:
12/04/2009 18:50

Ismet



Our builder has organised our KDV and all other taxes have been paid last week. However he has included a bill for £200 for an advert in the newspapers, as per instructions from the Tapu office. The builder built 6 houses and still owns 3 which he rents out. A forth house's owners did not want to pay their taxes, therefore my neighbour and I did. We are told that he needs to advertise that he is doing a partial parcelisation to inform any interested parties. Can you advise?

mikemans


Joined: 12/04/2009
Posts: 103

Message Posted:
12/04/2009 19:32

I believe the money paid was not for VAT but land tax at 5% levy and 75% of the land tax was paid to the developer does he have a legal obnligation to keep this money apaprt from company assets on the basis he collected it as a tax on behalf of the TRNC government for payment as and when title deeds are issued. The reason for 75% was no one knew the truie amount until valued

joandjelly


Joined: 24/02/2008
Posts: 2953

Message Posted:
12/04/2009 20:33

Sounds like a nice little interest free loan to me Mike. I have personally never heard of a developer doing this as the tax is between the purchaser and the tax office and then the vendor (the developer) pays their capital gains tax separately. I hope that when the time comes the developer does the honourable thing and passes YOUR money to the tax office and doesn't use it for his own liability.

elko2



Joined: 24/07/2007
Posts: 4400

Message Posted:
12/04/2009 22:48

I do not know the ins and outs of parcellisation, so I cannot make any comments there. The rest is simply guesses and nothing solid to comment on. Sorry, I am lost.



The transfer tax which is 5% but with an option of 3% for once in a life has to be paid by the purchaser directly to a bank and then you take the receipt to the District Land Office. Payment of VAT to the tax office is a direct responsibility of the vendor but as in sale of any goods it is collected from the purchaser. Such matters should be clear in the sale contracts.

ismet

mikemans


Joined: 12/04/2009
Posts: 103

Message Posted:
13/04/2009 13:28

Thanks for the response folks, I guess I will take this up with the advocate on my next visit. I view of comments i need to double check just what tax was passed across to the developer to make sure I am proceding with the correct questions as a doubt now exiosts as to what tax was paid to the developer, although I am sure it was the land tax related to the construction of a dwelling. many thanks for the responses, kind regards.



Michael

mikemans


Joined: 12/04/2009
Posts: 103

Message Posted:
13/04/2009 23:08

By the way J&T, the money alas is not on deposit, if it was I would be a happy bunny. The developer almost certainly has ploughed the money back in to further property development, whcih now cannot be sold due to world recession. For the sake of all I wish the developper good luck and every success in recovering.

the butler


Joined: 22/06/2007
Posts: 1958

Message Posted:
14/04/2009 11:43

Dear mikemans,



I suspect you and I have the same developer, all though not on the same site.

I paid 75% of the VAT when I purchased in 2006, as did every other buyer. I too would like to know what has happened to this money, which when all added together is a sizeable sum. I do not think that it has been put in a separate account but has been absorbed into this developers many other businesses. I suspect this is the reason we have been told that our title deeds will not be ready soon. After all, if all of this VAT + Capital gains tax needs to be paid before transfer, I think we will be waiting forever. There needs to be a change in the law, which forces developers to keep this money separate. Once ptp is granted the developer should be made to transfer title within six months.



The Butler

mikemans


Joined: 12/04/2009
Posts: 103

Message Posted:
15/04/2009 12:47

Hi The Butler can you contact me on my email michaelmansworth@btinternet.com and we can have a private conversation regarding what legal aspects are evolving, kind regards



Michael