You are here: Home - News -

HMRC chasing £35m in Stamp Duty avoidance

by: Mortgage Solutions
  • 28/10/2011
  • 0
HMRC chasing £35m in Stamp Duty avoidance
HMRC is preparing to go to court to challenge Stamp Duty tax avoidance schemes that have cost it £35m in lost revenue.

Homebuyers are increasingly avoiding paying Stamp Duty due to the rise of dozens of websites offering tax planning and “mitigation” schemes that claim to be able to legally exploit tax loopholes to avoid paying the property tax, according to the BBC.

HMRC said it is investigating 1,200 people that it believes have underpaid Stamp Duty by £35m and will pursue tax avoiders.

The websites claim that tax specialists will use “Stamp Duty tax planning” to enable homebuyers to avoid paying the tax and can charge fees of around half the amount that would have been paid in tax.

Such websites claim that methods homebuyers can use to avoid Stamp Duty include: paying for chattels – fixtures and fittings – separately to bring the cost of the property below the £125,000 threshold; or setting up a limited liability company to buy the property and sell it back to the individual.

However, an HMRC spokesperson told the BBC: “The schemes rely on an interpretation of law that produces an outcome different from that envisaged when the law was enacted, and that HMRC does not accept.”

The spokesperson said HMRC is preparing to challenge the schemes through the courts.

Chancellor George Osborne announced in the Budget 2011 a clamp down on Stamp Duty avoidance, with legislation introduced on 24 March that aimed to make tax avoidance schemes ineffective.

Law firms have also warned against their use.

Ian Montgomery, a solicitor at Boodle Hatfield, said that unless “particularly aggressive tax planning is undertaken”, it is not possible to avoid Stamp Duty, with the belief that it can be done by purchasing a property using a company misplaced.

He said: “When a property is purchased through a company, whether based offshore or in the UK, it pays the same rate of Stamp Duty as if it were an individual.”

There are 0 Comment(s)

You may also be interested in

Read previous post:
Chancellor George Osborne
Osborne: UK will not fund eurozone rescue

The Chancellor George Osborne has pledged to stop cash from British taxpayers being used to fund the eurozone bailout.