I was amazed to find out that a friend of mine is selling his house using a raffle. offering the property as the first prize! I'm concerned about whether this is legal and wha the risks are. Can you advise?

It became fashionable to sell your property by raffle in the height of the property boom, but now there has been a dip in property prices, there is a chance that your friend may not sell many tickets. I understand more than 100,000 tickets need to be sold to cover costs. Most importantly the terms and conditions for the raffle have to include clauses making provision to award cash, less expenses and charity donationtions, if not enough tickets are sold to achieve the target.

Raffles fall withing the domain of the Gambling Commission and the HMRC, so I hope your friend will follow the rules to the letter or he could end up with a fine of up to £5,000 and a 51 week prison sentence. HMRC can levy a 12 per cent lottery duty on the ticket sales of unlawful lotteries. In order to be legal, a raffle will only be allowed if it supports a "good cause" which includes charities and not-for-profit organisations. If the result of the raffle is purely based on chance, and people pay to enter then it becomes a lottery, not a raffle - and no one can run a lottery for their own profit.

The proceeds from ticket sales will be seen as income which may also lead to higher tax liabilities.

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