HMRC Chasing £35m of (legally) unpaid Stamp Duty

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HMRC Chasing £35m of (legally) unpaid Stamp Duty

Post by WD40 @ Fri Oct 28, 2011 7:39 pm

http://www.bbc.co.uk/news/business-15479321

HM Revenue and Customs (HMRC) says it is chasing unpaid tax of £35m amid tax planning and "mitigation" schemes being offered on the internet. Dozens of websites are now advertising deals, for a fee, claiming there is a loophole in the law. The websites claim that tax specialists will use "stamp duty tax planning" to negate a homebuyers requirement to pay the duty. They charge a fee of around half of the amount that would have been paid in tax.

One [method of avoiding paying SDLT] was by paying for chattels - fixtures and fittings - separately and, as a result, bringing the cost of the actual property below the £125,000 threshold. The second was by setting up a limited liability company to buy the property, which then immediately sold it back to the individual.

...

An HMRC spokesman said: "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." Anyone using an avoidance scheme was artificially reducing the tax due on property transactions, giving them an unfair financial advantage over the majority of property purchasers who played by the rules, he said. The tax authority was investigating 1,200 people it believed had underpaid tax totalling £35m.

...

Boodle Hatfield said it was increasingly common to read of wealthy individuals buying property through companies, often located offshore, to avoid paying stamp duty land tax. This could have been fuelled by the increase earlier in the year of the rate to 5% on properties valued over £1m.


Can HMRC challenge their own loopholes? It's not individuals' fault they exist. Reads to me like HMRC are trying to shut the stable door after the horse has bolted on this one. I wonder how quickly their solicitors will generate bills equal to or in excess of the disputed underpayment. I'd have had them working instead to close it instead before bringing media attention to the case - it just means more people are aware of the loophole now. :banghead:
Last edited by WD40 on Fri Oct 28, 2011 7:40 pm, edited 1 time in total.
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Re: HMRC Chasing £35m of (legally) unpaid Stamp Duty

Post by stuart @ Fri Oct 28, 2011 7:43 pm

There is tax planning and tax evasion. Generally if you do something like set up a company for the sole reason to avoid paying tax (i.e. in the LTD company example in your OP) then the HMRC will argue that isn't planning, that's evasion.

And they will get their money.
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Re: HMRC Chasing £35m of (legally) unpaid Stamp Duty

Post by Dirk @ Fri Oct 28, 2011 7:46 pm

The chattels one has been well known for a long time, and unless you push your luck it is fine.

Wouldn't a company have to charge VAT? and thus negate any advantage
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Re: HMRC Chasing £35m of (legally) unpaid Stamp Duty

Post by mmm-five @ Fri Oct 28, 2011 7:49 pm

It's not a loophole, it's just the companies organising these 'mitigation' schemes are interpreting it in a different way to what the HMRC have already explained. We know how often HMRC gets away with retrospectively applying 'vague' rules, so I can't see anyone getting away with this for too long.

Don't know how the Ltd company scheme works as the Ltd is still liable for the stamp duty. Maybe the LTD goes into liquidation to avoid paying any stamp duty?

In the end the buyer will still be held liable for the stamp duty, not the company who took 50% of the 'saving', as you've set the company up for the sole purpose of evading/avoiding tax.
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Re: HMRC Chasing £35m of (legally) unpaid Stamp Duty

Post by WD40 @ Fri Oct 28, 2011 7:50 pm

I suppose so, will be an interesting one. Just did a quick bit of maths in my head and unless I've stuffed up my "0"s, that's a mean average of around £30k per individual case. Which translates to what, £750-900k homes?
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Re: HMRC Chasing £35m of (legally) unpaid Stamp Duty

Post by thekungfury @ Fri Oct 28, 2011 8:20 pm

I know somebody on here whose anus might just be puckering at the moment.
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Re: HMRC Chasing £35m of (legally) unpaid Stamp Duty

Post by Strawman @ Fri Oct 28, 2011 8:58 pm

<opens files<

You're shittin' me!

<deletes file>
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Re: HMRC Chasing £35m of (legally) unpaid Stamp Duty

Post by WD40 @ Fri Oct 28, 2011 8:59 pm

TKF wrote:I know somebody on here whose anus might just be puckering at the moment.


Uncle Soov?
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Re: HMRC Chasing £35m of (legally) unpaid Stamp Duty

Post by Tokyo Sexwale @ Fri Oct 28, 2011 10:49 pm

TKF wrote:I know somebody on here whose anus might just be puckering at the moment.

Bottled It in the end so am smugly poorer.
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Re: HMRC Chasing £35m of (legally) unpaid Stamp Duty

Post by Towie @ Sat Oct 29, 2011 12:18 am

Love the way that HMRC persues individuals while letting big business shmooz (sp?) it's way out of tax liabilities. Vodafone anyone?

And the best one of all, All of HMRC's buildings were sold to a company (Mapley?) which now leases them back. And where des this company operate out of? The Caymans or some other tax haven. Unbelievable really.
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Re: HMRC Chasing £35m of (legally) unpaid Stamp Duty

Post by jewhoo @ Sat Oct 29, 2011 12:34 am

Arthur Scherbius wrote:The chattels one has been well known for a long time, and unless you push your luck it is fine.
Wouldn't a company have to charge VAT? and thus negate any advantage


Not necessarily. It depends where and what the customer is.

As this little set up is contrary to the purpose of the law and is done specifically for a tax advantage, HMRC will win any legal cases as the legislation is drafted to prevent abuse. This looks pretty much identical to the value-shifting schemes in VAT where currys et al tried to apportion a load of their white goods sales price to VAT-exempt insurance in order to reduce the VAT bill
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Re: HMRC Chasing £35m of (legally) unpaid Stamp Duty

Post by randlemarcus @ Sat Oct 29, 2011 1:15 am

Towie wrote:Love the way that HMRC persues individuals while letting big business shmooz (sp?) it's way out of tax liabilities. Vodafone anyone?

And the best one of all, All of HMRC's buildings were sold to a company (Mapley?) which now leases them back. And where des this company operate out of? The Caymans or some other tax haven. Unbelievable really.

Schmooze. Excellent word.

Problem is a global one. Vodafone make much more money outside the UK than they do inside. Why on earth would they bring all that money into the UK to be taxed on it? And if they deliberately open themselves to more tax than they legally need to, then the shareholders have a good argument for mismanagement.

The HMRC one has been being shouted to the rooftops by Private Eye for a while (read years), and still makes absolutely no sense, financially or politically, to me.

Not sure the problem is solvable any more, as everyone has a finger in someone elses pies. Urgh.
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Re: HMRC Chasing £35m of (legally) unpaid Stamp Duty

Post by thekungfury @ Sat Oct 29, 2011 8:58 am

Second Marine wrote:
TKF wrote:I know somebody on here whose anus might just be puckering at the moment.

Bottled It in the end so am smugly poorer.

phewrofl
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Re: HMRC Chasing £35m of (legally) unpaid Stamp Duty

Post by WD40 @ Sat Oct 29, 2011 9:01 am

Second Marine wrote:
TKF wrote:I know somebody on here whose anus might just be puckering at the moment.

Bottled It in the end so am smugly poorer.


:hehe:
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Re: HMRC Chasing £35m of (legally) unpaid Stamp Duty

Post by whyohwhy @ Sun Oct 30, 2011 5:19 am

Avoiding tax ends up in one word Greece.

I dont like paying tax, and dont think all of it is fair, but it pisses me off when those who can afford to find these loopholes to further expand their wallets

I know someone who ended uo with a 3.1/2 year prison sentence and a £3.7 mill confiscation order for hiding £1.2 mill of money he should have paid tax on.

Due to his arrogance his company went bust and he spent 18 months in jail, all be some of it in holiday camp prison.

He still hasn't paid the fine, and despite the threat of another 6 years in prison he is still out and claims his innocence.

What HMRC should be doing is taking his house and the assets they threatened to take as part of the confiscation order but they seem to have lost interest.

Or finding the moeny he has stashed eleswhere.
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Re: HMRC Chasing £35m of (legally) unpaid Stamp Duty

Post by Palin4President @ Mon Oct 31, 2011 11:11 am

*cough*

Bit of a catch reporting missing money you haven't paid any tax on? :D
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