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Government forces more disclosure of stamp duty land tax avoidance schemes


The Government has demanded that agents selling schemes that help buyers avoid stamp duty land tax (SDLT) on very expensive houses disclose more of those schemes to it. It has proposed a law change as part of the Finance Bill 2012.

SDLT has been avoided by buyers and sellers of very expensive houses setting up foreign-registered companies with a property as an asset and selling the company, rather than the property. This avoids SDLT, which can save buyers hundreds of thousands or even millions of pounds.

It has been estimated that SDLT avoidance schemes cost the exchequer between half a billion and a billion pounds a year. Finance website This Is Money reported that every house on a London street with an average price of £35 million was held by an offshore company. SDLT on a £35m house would be £1.7m.

The Government has now changed the Disclosure of Tax Avoidance Schemes (DOTAS) regime for SDLT in a way that will force more advisors to disclose the existence of more schemes. Schemes that were exempt from disclosure will no longer be exempt.

When schemes are disclosed to Her Majesty's Revenue and Customs (HMRC) by users or advisors they are given a scheme reference number, which helps HMRC track their use.

"SDLT avoidance schemes that were first disclosed before April 2010 were left out of the SRN regime by “grandfathering” rules," said a background note (5-page / 90KB PDF) on the changes produced by the Treasury. "The Government intends to remove these grandfathering rules for certain schemes so that they will fall within the SRN regime."

The changes will also remove property valuation thresholds for disclosure of schemes.

"These changes will increase HMRC's awareness of SDLT avoidance schemes and those using them," said the Treasury note. "They will support HMRC's anti-avoidance strategy to prevent, detect and counter tax avoidance. This will help to make the tax system fairer by ensuring that everyone pays their fair share."

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