HMRC collects £92m in property tax avoidance crackdown

The government's targeted crackdown on stamp duty land tax avoidance seems to be taking effect as property investors lose their appetite for such schemes, Collyer Bristow has advised.

HMRC's Counter Avoidance Directorate, which is focused on marketed tax avoidance, collected £92m in unpaid stamp duty land tax during 2015/16 as the government clampdown begins to have an impact.

Collyer Bristow suggested the fall from £301.2m, collected by the directorate over the previous year, is an indication that changes to the law have started to successfully prevent opportunities to avoid SDLT.

The firm added that this may indicate a general loss of appetite for these schemes, and tax avoidance in general, among property purchasers.

James Badcock, a partner at the firm, remarked: 'The government has closed many of the loopholes which made SDLT avoidance schemes plausible. Their efforts are reflected in the sharp fall in extra tax collected through investigations. The Revenue has also been very open about its intention to litigate against SDLT avoiders.

'The fall is also likely to be due to a change in taxpayers' attitudes. High-profile scandals and a spotlight on tax avoidance in the press seems to have suppressed residential property purchaser's appetites for these kinds of scheme '“ and indeed engagement with any activity which could be deemed abusive avoidance. Increasing numbers of taxpayers have faced enquiries from HMRC in relation to tax schemes and are 'once bitten, twice shy'.'

The fall in collected tax should not, however, be a cause for complacency, or a signal that HMRC is taking a spotlight off the area, added Badcock, who advised property investors to ensure their tax affairs were in order should they come under question.

'While in many cases there may have been a legal justification for transactions which allowed an SDLT liability to be avoided,' he said, 'HMRC can be expected to continue to challenge schemes and anyone who is concerned at all should now seek advice.'

John van der Luit-Drummond is deputy editor of Solicitors Journal

john.vanderluit@solicitorsjournal.co.uk | @JvdLD