There was an interesting article in the Telegraph today regarding the taxman closing a property tax stamp duty loophole.
This ruling is thought to boost future HMRC revenues by £160m.
Heres the full article from The Telegraph.
A High Court ruling has sided with the taxman over legislation introduced last year which aims to stop wealthy property buyers avoid paying tens of thousands of pounds in stamp duty.
Last June the taxman moved to close a loophole on stamp duty land tax (SDLT) avoidance schemes. These schemes enable property buyers to avoid paying stamp duty, typically on homes worth seven figures.
There are various schemes but the most common involves transferring ownership of a property to an offshore company so that when it comes to be sold the buyer purchases the company as a whole.
In doing so stamp duty can be cut from 5pc to 0.5pc on a property valued between one to two million pounds.
The retrospective legislation introduced by the taxman last year aimed to close down these schemes.
High Court Ruling
One such scheme – structured by advisers Blackfriars Tax Solutions LLP – which aimed to minimise stamp duty tax took the taxman to court in order to challenge the legislation.
But the High Court this week thrown out the appeal, with the judge concluding that everybody buying property needs to pays their fair share of stamp duty land tax.
The crackdown is expected to boost revenues by £160m.
Jim Harra of HM Revenue and Customs said:“Our commitment to stop this kind of stamp duty land tax abuse was made clear with the warning given by the Chancellor in Budget 2012 and the introduction of retrospective legislation to tackle the problem in the Finance Act 2013.
“Because of that, it should have been obvious to both promoters and users of this scheme that it could be subject to retrospective action. Our approach to tackling the scheme has now been backed by the courts.”
How buyers are trying to avoid stamp duty
Dozens of websites claim to save buyers thousands of pounds in stamp duty. In most cases, experts argue their methods are illegal or unlikely to succeed.
Some buyers, though, are trying new tactics to keep house prices below stamp duty threshold.
The Telegraph has heard of a case where a buyer submitted a bid of £490,000 for a property valued at £520,000 and offered to pay for the seller’s wedding to avoid paying an extra 1pc stamp duty.