Speaking at a pre-Budget breakfast roundtable in London, George Bull, senior tax partner at Baker Tilly said that the UK’s lax property tax, which allows wealthy individuals to buy high end properties via offshore vehicles, currently, makes it “tricky to catch tax avoiders.”
He said: “If the government tackles the overseas companies we may have a whole new tax coming on.”
He told delegates that another route which could see a clampdown is sub-sale schemes, which he claims are being “widely used.”
Normally, SDLT is payable on the purchase or transfer of property or land in the UK. Sub-sale relief is designed to ensure that, where a property transaction happens in several stages, SDLT is paid only once on the full value of the final transaction by the person who ultimately acquires it to avoid double charging.
HMRC said that in some cases an intermediate sale, often on the same day, is introduced into the arrangements with the sole intention of removing the true purchase price to exploit sub-sale relief.
Bull added that sub-sale schemes are heavily used in the UK and that the government has already put out warnings in the legal profession not to do it.
“We may see in the Budget some mention of legislation to challenge Stamp Duty dodging by abolishing sub-sale relief.”
Meanwhile, Gary Heynes, partner at Baker Tilly added that the Chancellor George Osbourne could introduce Capital Gains Tax for non residents.
“This would bring us in line with most of the rest of the world,” said Heynes.
He added that this could have a disproportionate effect on the property market, especially in London where the bulk of foreign buyers are purchasing properties.
