HM Revenue & Customs has announced it is challenging Stamp Duty Land Tax avoidance schemes. This will involve comparing transactions reported to the Land Registry with land transaction returns made to HMRC and following up any discrepancies.
The Revenue started making noises about their more agressive attitude to such schemes in the June 2010 edition of Spolights (see: http://www.hmrc.gov.uk/avoidance/spotlights10.htm)
Among other things it warns of various point to be wary of when being offered a tax saving scheme, including:
- It sounds too good to be true.
- Artificial or contrived arrangements are involved.
- It seems very complex given what you want to do.
- There are guaranteed returns with apparently no risk.
- There are secrecy or confidentiality agreements.
- Upfront fees are payable or the arrangement is on a no win/no fee basis.
- The scheme is said to be vetted by a top lawyer or accountant but no details of their opinion are provided.
- The scheme is said to be approved by HMRC (it does not follow that this is true).
- It involves money going in a circle back to where it started.
This was followed in November 2010 with revised guidance notes on section 75A of the Finanance Act 2003 providing examples of schemes which would fall foul of this section, many of which still appear to be touted by Stamp Duty saving promoters (see: http://www.hmrc.gov.uk/so/section-75a.htm)
It is likely more and more people will be considering such schemes, especially in light of the increase in stamp duty for properties over £1 million (a new rate of 5% applies to all transaction which complete on or after 6th April 2011). But given the Revenues stance any such schemes should be approached with caution.
For further advice on Stamp Duty matters and high value residential property transactions call Mark Sadler or Fred Rylad at kenneth elliott + rowe 01708 757575 or email firstname.lastname@example.org