Author Topic: Stamp Duty 'mitigation' avoidance schemes on the increase  (Read 3545 times)

0 Members and 1 Guest are viewing this topic.

Philofacts

  • Global Moderator
  • Senior Member
  • *****
  • Posts: 455
  • Country: england
  • New Home Expert
    • Brand New Homes
Stamp Duty 'mitigation' avoidance schemes on the increase
« on: December 19, 2011, 11:29:51 am »
There has been an increase in the number of firms providing services aimed at eliminating STAMP DUTY on property purchases using mitigation schemes.

These are becoming increasingly popular among buyers of homes costing above £500,000 incurring the higher 4% rate of Stamp Duty Land Tax.

Most schemes operate with the buyer setting up a limited company with 'distinct and protected assets' before the purchase.
When the purchase takes place the company has a legal right to buy that property. The company's right to buy lasts for 100 years but it never taken up.
Mitigation experts then argue that as a contract has been made for the company to buy the property, a full land transaction has not taken place meaning that no stamp duty is payable at this point.

The purchaser (not the company) is named as the owner in the title deeds and is named on the Land Register.

Purchasers are required to send a letter to HMRC explaining what they have done.
It is claimed under the 2003 Finance Act that the HMRC has 9 months and 30 days to launch an investigation, if they do not do so, the purchaser has escaped all stamp duty liability.

However, HMRC officials dispute the legality of these schemes and warm any unpaid stamp duty land tax will be recovered.
There are some HMRC cases where SDLT is being demanded several years after the properties were bought.

London estate agents Hamptons, say 34% of all high-end London transactions now involve stamp duty avoidance schemes costing the exchequer £750million a year
Make a Donation - If you found the information and advice helpful.
The premier information website for the UK new home buyer.


The Prophet

  • Global Moderator
  • Senior Member
  • *****
  • Posts: 364
  • Country: england
  • Financial & Economics commentator
Boris Johnson says Stamp Duty should not be optional
« Reply #1 on: March 15, 2012, 11:40:00 am »
Foreigners are helping sustain the London property market.
However, London mayor Boris Johnson is calling for tighter controls and the closing of loopholes.
These enable the very rich, especially 'non-doms' to avoid paying stamp duty by treating the house as a company.
They then buy shares in the company paying 0.5% tax rather than 5% stamp duty. Even more people are using "a legal dodge called sub-sale relief".
Stamp Duty avoidance could be costing the Treasury a billion pounds a year.

Even though we all hate it, it is time the rich paid stamp duty like everyone else!