Sharia Law in the UK?

[Soapy Sam]

While I feel Rowan whateverhisnameisbutnottheonein"Mr.Bean" has a right to his opinion, I do not think he should use his place as head straight man for one of the sillier of religions to try to influence public legal/ political debate.

Legal advice from men in fancy dress with waggly beards is a religious practice better suited to the Middle East. It is so frightfully un-British, that I find myself wondering if the ArchBish is actually a Muslim "sleeper" infiltrated into the CoE by Alqaeda.
Stick the fellow in Gitmo, I say.

 

[Lothian]

While I feel Rowan whateverhisnameisbutnottheonein"Mr.Bean" has a right to his opinion, I do not think he should use his place as head straight man for one of the sillier of religions to try to influence public legal/ political debate.

Having an intellectual as head of a Church is like putting a pacifist in charge of the Army. It was never going to work.

 

[Jaggy Bunnet]

UK law should not aim to give different results for what is essentially the same transaction.

Nice in principle, very very difficult in practice.

A good example is alternative finance products used to acquire property. As noted, interest is not permissible, so you can't borrow to buy your house. Solution was for the Bank to buy the house and rent it to you with an option to acquire it after a specified term for a specified sum. Problem was this meant that the Bank had to pay stamp duty when it bought the property and so did the customer when they bought it. Legislation was therefore introduced to remove one of the stamp duty charges (I think the Bank's) - result is widespread use of structures which exploit this loophole for commercial property transactions.

 

[Lothian]

Nice in principle, very very difficult in practice.

A good example is alternative finance products used to acquire property. As noted, interest is not permissible, so you can't borrow to buy your house. Solution was for the Bank to buy the house and rent it to you with an option to acquire it after a specified term for a specified sum. Problem was this meant that the Bank had to pay stamp duty when it bought the property and so did the customer when they bought it. Legislation was therefore introduced to remove one of the stamp duty charges (I think the Bank's) - result is widespread use of structures which exploit this loophole for commercial property transactions.

Tax avoidance (or theft from the public purse) is possibly an area where Sharia law might offer a solution.

Legislation is difficult. However being difficult should not be a barrier.

There are ways to enact legislation to ensure it is read with a purposative approach. There are also options to include specific or general anti avoidance provisions.

 

[Jaggy Bunnet]

Tax avoidance (or theft from the public purse) is possibly an area where Sharia law might offer a solution.

Tax avoidance is legal. If you have ever given a donation to charity and ticked the gift aid box, you have engaged in tax avoidance.

Legislation is difficult. However being difficult should not be a barrier.

There are ways to enact legislation to ensure it is read with a purposative approach. There are also options to include specific or general anti avoidance provisions.

Purposative approach won't help here - the purpose of the legislation is perfectly clear: to enable certain property transactions, which meet all the relevant conditions, avoid a stamp duty charge.

Don't see how either a GAAR or a mini-GAAR is going to help either - the only difference between the people you think are doing unacceptable tax avoidance and those doing legitimate business is religious belief. Don't like your chances of winning an anti-discrimination case.

 

[Lothian]

Tax avoidance is legal. If you have ever given a donation to charity and ticked the gift aid box, you have engaged in tax avoidance.

I think tax avoidance is a term that means different things to different people. Certainly schemes described by some as tax avoidance have been seen as abusive by courts. As such they are not illegal rather they just don't work, but I nevertheless take your point.

Purposative approach won't help here - the purpose of the legislation is perfectly clear: to enable certain property transactions, which meet all the relevant conditions, avoid a stamp duty charge.

Don't see how either a GAAR or a mini-GAAR is going to help either - the only difference between the people you think are doing unacceptable tax avoidance and those doing legitimate business is religious belief. Don't like your chances of winning an anti-discrimination case.

If you word it "to enable certain property transactions, which meet all the relevant conditions, avoid a stamp duty charge" I agree it could be difficult.

I know a lot of the Stamp Duty Legislation was rewritten 3 or 4 years ago. If rewritten as primary legislation and introduced through parliament, Hansard could make clear the reasons for the exemption and the situations in which it is envisaged that the exemption applies.

I can see how in your example a Muslim buying a house through a bank could be disadvantaged.

If the SFA want to buy Murrayfield from the SRU and the sale is routed through Edinburgh Rugby I am not sure the situation is necessarily the same.

I am no expert in Shaira law and don’t know whether it applies to virtual persons as well as real ones, Neither do I profess to be an expert in stamp duty, but I would have thought that a solution could be found without the need of a GAAR. Is there not some way the Ramsey principle could apply?

 

[WildCat]

There is a conflict between Sharia Law and UK law and it is right that something is done to assist Muslims in some circumstances, particularly finance.

Muslims are not allowed to make money from money. This means that financial products we take for granted need to be restructured for Muslims.

I don't see how this is a problem. It's the bank making money, not the Muslim borrower.

Take a transaction of buying a car. Say someone wants to by a car for £15,000 but does not have the money to buy it outright. He goes to the bank who lend him £15,000 at 5% over three years. He pays back (roughly) £15,000 x 5% x 3 years = £17250.

Now that is a crime! Because my calculations come out to £16,184.

Under Sharia Law the Bank can not charge for lending money.

Why should Sharia apply to the non-Muslim bank?

 

[Lothian]

I don't see how this is a problem. It's the bank making money, not the Muslim borrower.

I am no expert but think that the borrower would not go to a bank who makes money on money, but has no problem going to a bank who overcharges them for goods. You may call that irrational. I call it religion

Now that is a crime! Because my calculations come out to £16,184.

5% of 15000 is 750. 3 x 750 = 2250. Ignoring compounding.

Why should Sharia apply to the non-Muslim bank?

Western banks are interested in muslim customers and therefore are keen to design products to attract such customers.

 

[WildCat]

I am no expert but think that the borrower would not go to a bank who makes money on money, but has no problem going to a bank who overcharges them for goods. You may call that irrational. I call it religion

But I don't think that is how it works. There's a reason that Jews have historically been in the banking business - it's because they have no religious problems with charging interest. Christians (back when usury was a sin) and Muslims would thus borrow their money from Jewish bankers without violating their own religious tenents.

5% of 15000 is 750. 3 x 750 = 2250. Ignoring compounding.

Mainly, you're charging interest on money that has already been repaid.

 

[Jaggy Bunnet]

I can see how in your example a Muslim buying a house through a bank could be disadvantaged.

If the SFA want to buy Murrayfield from the SRU and the sale is routed through Edinburgh Rugby I am not sure the situation is necessarily the same.

I am no expert in Shaira law and don’t know whether it applies to virtual persons as well as real ones, Neither do I profess to be an expert in stamp duty, but I would have thought that a solution could be found without the need of a GAAR. Is there not some way the Ramsey principle could apply?

Well if you can think of one the Treasury would love to hear from you, because it is costing them a lot of money!

Ramsey is a non-starter though, IMO.

 

[Jaggy Bunnet]

But I don't think that is how it works. There's a reason that Jews have historically been in the banking business - it's because they have no religious problems with charging interest. Christians (back when usury was a sin) and Muslims would thus borrow their money from Jewish bankers without violating their own religious tenents.

I guess, like many other things, it depends on which flavour of religion you follow:

http://www.bbc.co.uk/religion/religions/islam/living/mortgages.shtml

"Muslims must be sure that the mortgage complies with Sharia (Islamic) law. The biggest problem for a British Muslim who wants to buy a house is that either paying or charging of interest is prohibited."

 

[gumboot]

I have issue with the use of the word "law" here. Law is a specific thing for those nations that respect and value the rule of law.

If particular communities or cultural sub-groups wish to establish "rules", they can go for it. It's done all the time, in virtually every place you can think of. Work places have rules. Sporting games have rules. Schools have rules. Muslims, Jews, and worshippers of the Wobbly Octopus are likewise to establish and enforce whatever rules they wish.

But they are not laws. They do not hold the same status as law, they should never be compared to law, and they do not exempt one from complying with law. Law supersedes rules, at every point.

 

[Jaggy Bunnet]

Sporting games have rules.

http://www.thefa.com/TheFA/RulesAndRegulations/FIFALawsOfTheGame/

http://www.bgs.qld.edu.au/edprog/extrac/rugby/laws.htm

A great many other bodies refer to "by-laws", for example the USGA has a model constitution and by-laws for member clubs to adapt.

I don't think the distinction is anything like as clearcut as you imply.

 

[tkingdoll]

I guess, like many other things, it depends on which flavour of religion you follow:

http://www.bbc.co.uk/religion/religions/islam/living/mortgages.shtml

"Muslims must be sure that the mortgage complies with Sharia (Islamic) law. The biggest problem for a British Muslim who wants to buy a house is that either paying or charging of interest is prohibited."

I was trying to explain this to a friend recently. He asked me why there are special Islamic mortgages. I said that Muslims can't pay interest, so instead the bank buys the house and sells it back to them at a much higher price which covers the amount of interest they would have paid over the life of the mortgage.

He replied "huh? That's the dumbest thing I ever heard. What kind of person believes in a deity so powerful, his every whimish law must be followed to the letter, but who can be fooled by simply moving a number from one column to the other? If these rules were genuine or respected, why are these workarounds being found?"

I didn't have an answer other than "because religion isn't always compatible with modern greed. People want to buy nice houses AND not get smote, so they find ways around the rules. There are no repercussions because, I assume, there is no god." Anyone have a better answer?

 

[Darat]

Yes - it's proof that "God" is in fact a lawyer. After all only lawyers accept these types of technicalities as "good" and "right".

 

[Jaggy Bunnet]

I was trying to explain this to a friend recently. He asked me why there are special Islamic mortgages. I said that Muslims can't pay interest, so instead the bank buys the house and sells it back to them at a much higher price which covers the amount of interest they would have paid over the life of the mortgage.

My understanding is that the bank buys the property, rents it back to them and grants them an option (or possibly they have cross options) to buy the house. So instead of paying interest they pay rent (which is OK) and over the life of the lease can save enough money to pay for the property (ironically, a bit like taking an interest only mortgage!).

He replied "huh? That's the dumbest thing I ever heard. What kind of person believes in a deity so powerful, his every whimish law must be followed to the letter, but who can be fooled by simply moving a number from one column to the other? If these rules were genuine or respected, why are these workarounds being found?"

I didn't have an answer other than "because religion isn't always compatible with modern greed. People want to buy nice houses AND not get smote, so they find ways around the rules. There are no repercussions because, I assume, there is no god." Anyone have a better answer?

Goddidit?

Moving in mysterious ways? (That's always a good one!)

"Look I only had seven days to make the whole shooting match and I wanted to play golf on the Sunday so you have to expect a few rough edges and some snagging"?

 

[Darat]

My understanding is that the bank buys the property, rents it back to them and grants them an option (or possibly they have cross options) to buy the house. So instead of paying interest they pay rent (which is OK) and over the life of the lease can save enough money to pay for the property (ironically, a bit like taking an interest only mortgage!).

...snip...

There's actually a few variations, see here for a quick summary: http://www.fancyamortgage.co.uk/IslamicMortgages/MortgageTypes.asp

 

[tkingdoll]

My understanding is that the bank buys the property, rents it back to them and grants them an option (or possibly they have cross options) to buy the house. So instead of paying interest they pay rent (which is OK) and over the life of the lease can save enough money to pay for the property (ironically, a bit like taking an interest only mortgage!).

We're both right. There are two types of Islamic mortgage, apparently: Murabaha, which is the sort I mentioned, and Ijara, which is the sort you mentioned.

Details here: http://www.mortgages.co.uk/islamic-mortgage.html

 

[ddt]

A good example is alternative finance products used to acquire property. As noted, interest is not permissible, so you can't borrow to buy your house. Solution was for the Bank to buy the house and rent it to you with an option to acquire it after a specified term for a specified sum. Problem was this meant that the Bank had to pay stamp duty when it bought the property and so did the customer when they bought it. Legislation was therefore introduced to remove one of the stamp duty charges (I think the Bank's) - result is widespread use of structures which exploit this loophole for commercial property transactions.

You are so lucky in the UK to have a stamp duty of maximally 4% - in Holland, it's a flat 6% rate. And at least that's something that you can come around with a carefully worded law. The bigger problem in Holland is that the interest paid on a house mortgage loan is an income tax deductible - and with most of mortgage terms being interest, you can see that's a big increase in cost.

 

[Jaggy Bunnet]

You are so lucky in the UK to have a stamp duty of maximally 4% - in Holland, it's a flat 6% rate. And at least that's something that you can come around with a carefully worded law. The bigger problem in Holland is that the interest paid on a house mortgage loan is an income tax deductible - and with most of mortgage terms being interest, you can see that's a big increase in cost.

Yes, we are so lucky that we don't get a tax deduction for our mortgage interest any more!

It would certainly make it a bit trickier to find a tax neutral solution though.