Bring millions more pounds into the Treasury's coffers, or keep the transfer programme on course? That's the choice facing the government in a row between social landlords and the Inland Revenue over the tax breaks that have provided a sweetener for stock transfers (see page 15).
Housing organisations, with the blessing of the ODPM and Customs & Excise, devised a system that allowed them to offset the cost of repairs to transferred homes against corporation tax. The multimillion-pound savings were often split between the council and the association.

But the Inland Revenue claims the practice is illegal and is trying to claw back the cash, creating a great deal of uncertainty and delaying at least two transfers. No doubt the Revenue believes it's on a sure legal footing, but with such a major plank of government policy riding on it, can it really afford to rob Peter to pay Paul?

At the very least, the Revenue could allow a tax amnesty for those that used the system in good faith, with a cut-off point some time next year once the current tranche of transfers has gone through.

A year to remember
As our review on pages 22-28 shows, 2003 was a momentous year of change for the housing sector.

Can the Inland Revenue really afford to rob Peter to pay Paul?

In February, John Prescott's seminal Communities Plan charted a new path for housing associations and councils, securing many innovations that were already in the pipeline. But the new money to boost housing supply in the South and revive decaying markets in the North and Midlands came with strings attached from the chancellor, who is unconvinced the sector spends its money efficiently. He launched a review of housing associations and gave them a tough new watchdog in the Audit Commission. The performance of RSLs is to be rated with stars, just like councils – 26 of which ended the year with more stars than last year (see page 8).

In 2003, the private sector was welcomed into housing like never before. Grant to developers is on the cards, as is a new type of investor who, encouraged by tax breaks, will invest in housing and swell the private rented sector. Meanwhile, the Department for Work and Pensions is piloting a scheme that encourages tenants to take their benefit and shop around for cheaper rents – another move that could bring market forces to social housing in a way that would have been unthinkable a few years ago. What's next, abolishing the social housing grant altogether?

It's a safe bet that 2004 will be an equally challenging and momentous year. We look forward to keeping you up to date with whatever is in store. We'll be back on 9 January, with news, features and comment.

Source

Housing Today