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.
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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.
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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.
