Property funds caught by stamp duty evasion law

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By Sean Farrell, Financial Editor

Two big property funds have had to suspend new investments and withdrawals after a Government attempt to crack down on stamp duty evasion caused their investors to be charged twice. UBS Triton and ING Lionbrook, Britain's biggest two property-holding partnership funds, are trying to persuade the Treasury to resolve the problem quickly.

July's Finance Act introduced measures designed to clamp down on evasion of stamp duty land tax, but the legislation inadvertently hit property-holding partnerships with the 4 per cent charge on property purchases and if investors put in or took out money.

Peter Macpherson, managing director at ING Investment Management, said: "The Treasury has accepted that this was an unintended consequence and has said it will co-operate in getting it sorted out. We hope it will be sorted out by the end of the year."

The Treasury said it was listening to the funds' views and would announce any changes in the pre-Budget report or the next Budget.

ING Lionbrook is a £1bn fund owned by the Dutch bank ING, and UBS Triton is valued at about £2.6bn and is part of UBS, the Swiss bank. The funds are structured so they have a number of so-called feeder funds tailored to different types of institutional investors.

The legal glitch will have affected other smaller property partnerships. The Liberal Democrats said the Treasury could have spotted the problem if it had taken more care.