Stamp Duty Land Tax (SDLT) Avoidance Schemes have returned to the headlines recently following the sanctioning of a Surrey law firm for its involvement in the avoidance scheme.
The implication often is that they are available to everybody, that most people make use of them and thus avoid paying Stamp Duty land Tax. Nothing could be further from the truth.
If you are a non-UK domiciliaries worth millions buying a property for multi-millions then one or more of these schemes may be something you are prepared to go along with.
In our experience, and we have been advising many clients buying for over £1m, the conclusion has been that they are not worth it. The purpose of this little note is not to go into the ins and outs of how the schemes work but to simply point out that they are verging on tax evasion which is illegal, rather than tax avoidance, which isn’t. Not only that but if you are buying a property and obtaining a mortgage, your mortgagee i.e. the Bank or Building Society lending you the money, will flatly refuse to do so if you are trying to avoid paying legitimate taxes to the Revenue. If you look at the major Banks who have been bailed
out by the Government this is entirely understandable.
A simple example, if you are buying a property at £1.2m you will have to pay £63,750 in SDLT. A significant amount of money. If you go along with one of the schemes you might on paper save 50% of that. The other 50% you will pay in fees. There are no guarantees that the scheme will work and you may have to wait up to 6 years before you can sleep soundly at night. At any
time within those 6 years you can and probably will be the subject of a Revenue investigation. If the Revenue take you to Court you would have to fund the litigation. This could be really expensive and is not for the faint hearted.
If you lose you will end up having to pay the original £63,750 you should have paid, a penalty of the same amount i.e. another £63,750 and interest. You also face the prospect of the costs of the exercise and possibly criminal proceedings. Bearing in mind that you will then have paid £31,875 to the clever so and so’s who devised the scheme, now long gone, and you will
bitterly regret that you ever bothered to do it.
For more information or a no obligation chat contact our Conveyancing Team.