Illegal tax schemes which allow landlords to avoid a recently introduced Stamp Duty Land Tax (SDLT) surcharge are on the rise – and HM Revenue & Customs (HMRC) has issued a warning, advising investors to steer clear.
A recent investigation conducted by The Telegraph found that so-called ‘stamp duty schemes’ have been on the rise in recent months – many of which are illegal and could see landlords facing prosecution, HMRC has warned.
The schemes have gained prominence following Chancellor George Osborne’s introduction of an additional three per cent SDLT surcharge on second home purchases – which many investors and critics have labelled ‘unfair’ since it was first implemented in April.
But HMRC has spoken out against landlords who might be tempted to take advantage of legal loopholes to avoid paying the charge, warning: “They [landlords] will be much worse off than if they had just paid the right tax at the right time, especially when they have paid fees to the promoter of the avoidance scheme, which are not refundable.”
An HMRC statement read: “These kinds of schemes don’t work. We have investigated thousands of cases since 2013, bringing in over £200 million in Stamp Duty Land Tax. These individuals have had to pay 100 per cent of the original tax due, plus interest.”