HMRC clamps down on stamp duty avoidance

HMRC clamps down on stamp duty avoidance

Homeowners who have taken part in schemes to avoid paying Stamp Duty Land Tax (SDLT) may have recently found the HMRC requesting money from them.

As part of their approach in tackling unpaid tax, the HMRC recently took a Stamp Duty Land Tax (SDLT) avoidance scheme to a First-tier Tribunal (Tax Chamber) and won.

The decision in this case – Vardy Properties & Vardy Properties (Teesside) Limited [2012] UKFTT 564 (TC) can be read here.

The Vardy scheme involved purchasing a property through a UK unlimited company. Funded by its shareholders specifically for the transaction, the unlimited company acquired the property, then immediately transferred it to its shareholders as a dividend.

The scheme claimed that the purchase by the unlimited company could be ignored by the stamp duty rules, and that the shareholder was not liable to pay as it had not paid anything for the property.

The tribunal found that the unlimited company had not followed company law requirements when declaring the dividend because the dividend had not been declared by reference to any accounts.

As a result, the dividend was unlawful and the purchase by the company of the property could not be ignored under the stamp duty rules, as claimed.

The unlimited company was therefore liable for the tax that the Vardy group had sought to avoid. Any consumers who used the same or similar schemes will be affected by the decision.

Those who entered into the scheme after 2006 will also be affected by the anti-avoidance legislation.

Affected consumers are advised to contact the HMRC on 03000 545987 to discuss paying the debt.

If you have used an SDLT scheme similar to the ones outlined in this article and have not been contacted by HMRC by 31 January 2013, then you can still call HMRC on Tel 03000 545987 to discuss matters.

Many may have been caught up inadvertently in the schemes, having trusted conveyancers to pay the HMRC the correct amount on their behalf’s.

So what does this mean for conveyancers involved? Are affected homeowners likely to seek redress from them?  

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