The convoluted, Rube Goldberg-worthy process described below, which affords preferential treatment to those who invoke Sharia, lends itself to any number of foreseeable abuses. Here is one. “Islamic law used to dodge stamp duty,” from the Daily Express, March 21 (thanks to Twostellas):
Sharia law is being used by house buyers posing as Muslims to dodge stamp duty, it was revealed yesterday.
A scheme, brought in by Labour in 2005, allows followers of Islam to buy property without paying the tax.
Paying interest is banned under Sharia law, so Muslims are allowed to buy a house and then sell it on to an offshore financial company.
They then lease the house from the company instead of taking out a mortgage, which would include interest payments. Stamp duty, which is applicable to all properties worth Â£125,000 and over, does not have to be paid on properties which are immediately sold on.
But the loophole, which costs the Treasury Â£40million a year, is now being used by some who pretend to be Muslim.
Sultan Choudhury, from the UK Islamic Finance Secretariat, said: “It was certainly not envisaged that some tax advisers would manipulate the legislation on behalf of their clients to avoid paying stamp duty at all.”