In these austere times, it can be tempting to take steps to reduce expenditure, particularly when making ‘big ticket’ purchases such as buying property.
One of the main items of expenditure associated with buying property is stamp duty land tax. It is charged at a rate between 1% and 5%, depending on the value of the property.
We have witnessed an increase in the promotion of stamp duty land tax avoidance schemes in recent years.
These are often promoted by accountants, as a way to reduce the cost of stamp duty when buying a new home. They claim to be exploiting legal loopholes, often inserting a corporation into the transaction to reduce the rate of stamp duty payable.
At the Personal Finance Society Conference last week, a tax lawyer warned that advisers should be “very careful” about recommending these avoidance schemes to their clients.
Adrian Shipwright of Allington Eames warned that if HM Revenue & Customs suspects these stamp duty avoidance schemes are operating outside of its rules, they have the power to launch an investigation up to four years after the scheme was established.
Some promoters of these schemes have suggested that they can only be investigated during the first ten months.
Where fraud is suspected, HMRC can extend the window for their investigation up 21 years.
Solicitors have already been advised by the Law Society not to recommend these stamp duty avoidance schemes.
Here at Informed Choice, we dislike any opaque tax avoidance schemes that risk a future investigation by HMRC.
Whilst the apparent tax savings can appear attractive, the cost of these schemes is often expensive compared to the risk of the scheme being unwound at some point in the future.
