ILOVEBHA
Member
Absolutely this area of tax is really interesting especially since we have found solutions out of most taxes.
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How to avoid paying stamp duty??
- Thread starter Dex10
- Start date
Absolutely this area of tax is really interesting especially since we have found solutions out of most taxes.
Uncle C
Well-known member
Does your Company have a web site I can look over?
Worries over stamp duty avoidanceBy Nicola Pearson
BBC News
Homes bought for more than £125,000 carry a stamp duty bill for buyers Continue reading the main story
Your HomeEight radical solutions to the housing crisis
Three reasons for rising rents
Interest rates and your finances
Making homes attractive to buyers
Homebuyers are avoiding paying stamp duty - costing the government millions a year - as the number of websites offering tax avoidance tips grows.
HM Revenue and Customs (HMRC) says it is chasing unpaid tax of £35m amid tax planning and "mitigation" schemes being offered on the internet.
Dozens of websites are now advertising deals, for a fee, claiming there is a loophole in the law.
But HMRC is pursuing tax avoiders and law firms have issued warnings.
Levy
Homebuyers are legally required to pay a stamp duty land tax of between 1% and 5% of the value of a home they buy.
Buyers are liable for the tax when they spend more than £125,000 on a property.
The websites claim that tax specialists will use "stamp duty tax planning" to negate a homebuyers requirement to pay the duty. They charge a fee of around half of the amount that would have been paid in tax.
Online calculators aim to assist people to work out how much they can save. Those who sell the schemes say customers are attracted because of tough economic times and mortgage lenders' requirements of higher deposits.
Continue reading the main story
Stamp duty thresholds
1%: Properties of £125,000 to £250,000, but first-time buyers are currently exempt
3%: £250,000 to £500,000
4%: More than £500,000
5%: More than £1m, residential property only
Stuart Cam runs half a dozen referral websites. He said he sent around 500 people a month to tax planners.
He said there were two popular methods. One was by paying for chattels - fixtures and fittings - separately and, as a result, bringing the cost of the actual property below the £125,000 threshold.
The second was by setting up a limited liability company to buy the property, which then immediately sold it back to the individual.
"There is a corporation in the middle, between you and the vendor, and due to the way corporation tax works you do not have to pay duty," he said.
Is it legal?
Tax planners claim they are legally exploiting loopholes in the current law.
"This is an aggressive tax planning move. You are essentially taking tens of thousands of pounds out of the Revenue's pocket. It is not for everyone. We tell our clients there is a 10% chance that they will receive a letter from HMRC challenging their tax return," said Mr Cam.
"My understanding is that everything being done is within the law. HMRC does understand these schemes and they have not yet closed the loopholes," said Mr Cam.
But an HMRC spokesman said: "The schemes rely on an interpretation of law that produces an outcome different from that envisaged when the law was enacted, and that HMRC does not accept."
Anyone using an avoidance scheme was artificially reducing the tax due on property transactions, giving them an unfair financial advantage over the majority of property purchasers who played by the rules, he said.
The tax authority was investigating 1,200 people it believed had underpaid tax totalling £35m.
HMRC was gearing up to challenge the schemes through the courts, the spokesman said.
Warnings
Law firms have warned against the internet schemes' tactics.
Boodle Hatfield said it was increasingly common to read of wealthy individuals buying property through companies, often located offshore, to avoid paying stamp duty land tax.
This could have been fuelled by the increase earlier in the year of the rate to 5% on properties valued over £1m.
"There is a growing belief that it is possible to avoid paying stamp duty land tax on the purchase of a property or land, and unless particularly aggressive tax planning is undertaken, that is just not the case," said Ian Montgomery, a solicitor specialising in tax at the firm.
"It is a common misconception that it is possible to purchase a property using a company and avoid stamp duty.
"When a property is purchased through a company, whether based offshore or in the UK, it pays the same rate of stamp duty as if it were an individual.
"Stamp duty may be avoided by future purchasers when the company decides to sell the property. This is done by the owner selling shares in the company rather than the property itself, but the duty will be paid on the initial purchase."
BBC News
Homes bought for more than £125,000 carry a stamp duty bill for buyers Continue reading the main story
Your HomeEight radical solutions to the housing crisis
Three reasons for rising rents
Interest rates and your finances
Making homes attractive to buyers
Homebuyers are avoiding paying stamp duty - costing the government millions a year - as the number of websites offering tax avoidance tips grows.
HM Revenue and Customs (HMRC) says it is chasing unpaid tax of £35m amid tax planning and "mitigation" schemes being offered on the internet.
Dozens of websites are now advertising deals, for a fee, claiming there is a loophole in the law.
But HMRC is pursuing tax avoiders and law firms have issued warnings.
Levy
Homebuyers are legally required to pay a stamp duty land tax of between 1% and 5% of the value of a home they buy.
Buyers are liable for the tax when they spend more than £125,000 on a property.
The websites claim that tax specialists will use "stamp duty tax planning" to negate a homebuyers requirement to pay the duty. They charge a fee of around half of the amount that would have been paid in tax.
Online calculators aim to assist people to work out how much they can save. Those who sell the schemes say customers are attracted because of tough economic times and mortgage lenders' requirements of higher deposits.
Continue reading the main story
Stamp duty thresholds
1%: Properties of £125,000 to £250,000, but first-time buyers are currently exempt
3%: £250,000 to £500,000
4%: More than £500,000
5%: More than £1m, residential property only
Stuart Cam runs half a dozen referral websites. He said he sent around 500 people a month to tax planners.
He said there were two popular methods. One was by paying for chattels - fixtures and fittings - separately and, as a result, bringing the cost of the actual property below the £125,000 threshold.
The second was by setting up a limited liability company to buy the property, which then immediately sold it back to the individual.
"There is a corporation in the middle, between you and the vendor, and due to the way corporation tax works you do not have to pay duty," he said.
Is it legal?
Tax planners claim they are legally exploiting loopholes in the current law.
"This is an aggressive tax planning move. You are essentially taking tens of thousands of pounds out of the Revenue's pocket. It is not for everyone. We tell our clients there is a 10% chance that they will receive a letter from HMRC challenging their tax return," said Mr Cam.
"My understanding is that everything being done is within the law. HMRC does understand these schemes and they have not yet closed the loopholes," said Mr Cam.
But an HMRC spokesman said: "The schemes rely on an interpretation of law that produces an outcome different from that envisaged when the law was enacted, and that HMRC does not accept."
Anyone using an avoidance scheme was artificially reducing the tax due on property transactions, giving them an unfair financial advantage over the majority of property purchasers who played by the rules, he said.
The tax authority was investigating 1,200 people it believed had underpaid tax totalling £35m.
HMRC was gearing up to challenge the schemes through the courts, the spokesman said.
Warnings
Law firms have warned against the internet schemes' tactics.
Boodle Hatfield said it was increasingly common to read of wealthy individuals buying property through companies, often located offshore, to avoid paying stamp duty land tax.
This could have been fuelled by the increase earlier in the year of the rate to 5% on properties valued over £1m.
"There is a growing belief that it is possible to avoid paying stamp duty land tax on the purchase of a property or land, and unless particularly aggressive tax planning is undertaken, that is just not the case," said Ian Montgomery, a solicitor specialising in tax at the firm.
"It is a common misconception that it is possible to purchase a property using a company and avoid stamp duty.
"When a property is purchased through a company, whether based offshore or in the UK, it pays the same rate of stamp duty as if it were an individual.
"Stamp duty may be avoided by future purchasers when the company decides to sell the property. This is done by the owner selling shares in the company rather than the property itself, but the duty will be paid on the initial purchase."
ILOVEBHA
Member
ILOVEBHA
Member
Just PM`d you details
Uncle Spielberg
Well-known member
The mortgage trade magazine, Mortgage Strategy
HMRC chasing £35m in Stamp Duty avoidance
28 October 2011 | By Paul Thomas
HM Revenue & Customs is chasing 1,200 people who have used stamp duty avoidance schemes to avoid paying the tax, costing the government £35m in tax revenues.
Earlier this year, HMRC ran a data matching exercise comparing data held by the Land Registry with stamp duty returns held by HMRC.
This revealed that through the use of these schemes about 1,200 people have not paid the right amount of Stamp Duty, costing the government around £35m in uncollected tax revenues.
A spokesman says: “We identified 1200 cases where marketed avoidance schemes have been employed to artificially reduce Stamp Duty land tax due on property transactions. Left unchallenged these schemes would potentially deny the country some £35m in vital tax revenues whilst giving those who used these schemes an unfair financial advantage over the majority of property purchasers who play by the rules.
“We wrote out to the 1200 people who have taken up these avoidance products setting out the correct tax position, ensuring a fair and level playing field for all property purchasers.”
HMRC chasing £35m in Stamp Duty avoidance
28 October 2011 | By Paul Thomas
HM Revenue & Customs is chasing 1,200 people who have used stamp duty avoidance schemes to avoid paying the tax, costing the government £35m in tax revenues.
Earlier this year, HMRC ran a data matching exercise comparing data held by the Land Registry with stamp duty returns held by HMRC.
This revealed that through the use of these schemes about 1,200 people have not paid the right amount of Stamp Duty, costing the government around £35m in uncollected tax revenues.
A spokesman says: “We identified 1200 cases where marketed avoidance schemes have been employed to artificially reduce Stamp Duty land tax due on property transactions. Left unchallenged these schemes would potentially deny the country some £35m in vital tax revenues whilst giving those who used these schemes an unfair financial advantage over the majority of property purchasers who play by the rules.
“We wrote out to the 1200 people who have taken up these avoidance products setting out the correct tax position, ensuring a fair and level playing field for all property purchasers.”
Pretty pink fairy
Banned
- Jan 30, 2008
- 31,981
just get's better doesn't it
Uncle Spielberg
Well-known member
Tax avoidance is a risky area imo. A wonder what the letter from HMRC says " where's our stamp duty you f*cking cheats ? ".
Uncle Spielberg
Well-known member
Latest.
There was an interesting piece in the Times last month. 1/3 of people who buy over £ 500k have avoided stamp duty to date.
The Treasury is to clamp down on people who attempt to avoid paying Stamp Duty on property transactions by setting up offshore companies in tax havens.
Today, as part of the finance bill, chancellor George Osborne is set to close a loophole which allows people to avoid paying the new 5% rate of tax by registering houses and flats in the name of companies rather than individuals, according to reports.
The company, which is set up in a tax haven, pays the tax in full at the outset but when the homeowner decides the sell the property, they sell shares in the company.
The transaction is not registered with the Land Registry and allows the new buyer to purchase the property without paying the full Stamp Duty, as the company shares are subject to a 0.5% rate of tax instead of the full 5%t Stamp Duty on conventional sales.
Last month, the chancellor announced the Stamp Duty holiday for first-time buyers purchasing properties of up to £250,000 will not be extended on March 24, 2012, branding the scheme a “failure”.
In October, HM Revenue & Customs revealed it is chasing 1,200 people who have used Stamp Duty avoidance schemes to avoid paying the tax, costing the government £35m in tax revenues.
There was an interesting piece in the Times last month. 1/3 of people who buy over £ 500k have avoided stamp duty to date.
The Treasury is to clamp down on people who attempt to avoid paying Stamp Duty on property transactions by setting up offshore companies in tax havens.
Today, as part of the finance bill, chancellor George Osborne is set to close a loophole which allows people to avoid paying the new 5% rate of tax by registering houses and flats in the name of companies rather than individuals, according to reports.
The company, which is set up in a tax haven, pays the tax in full at the outset but when the homeowner decides the sell the property, they sell shares in the company.
The transaction is not registered with the Land Registry and allows the new buyer to purchase the property without paying the full Stamp Duty, as the company shares are subject to a 0.5% rate of tax instead of the full 5%t Stamp Duty on conventional sales.
Last month, the chancellor announced the Stamp Duty holiday for first-time buyers purchasing properties of up to £250,000 will not be extended on March 24, 2012, branding the scheme a “failure”.
In October, HM Revenue & Customs revealed it is chasing 1,200 people who have used Stamp Duty avoidance schemes to avoid paying the tax, costing the government £35m in tax revenues.
Good - quite why people think they should be able to avoid stamp duty is beyond me.
ILOVEBHA
Member
More rubbish spouted by the Government it would be interesting to see how many of the MP`s have used a SDLT Mitigation scheme themselves.
Tax planning will always go on and we even have the former head of HMRC giving us tax planning advice.
Tax planning will always go on and we even have the former head of HMRC giving us tax planning advice.
Uncle Spielberg
Well-known member
Osborne has stated he is coming after the people who avoided stamp duty on purchases over £ 500k. I know of a client who did this and has been written to demanding the money back plus interest. Osborne intends not only to claw the money back but to add punitative charges on top. Can they do this ? What is the view of ILOVEBHA ? The same client is looking to buy again at over £ 1m so I don't think I will be advising them to do this scheme.
BBC News - Budget: Osborne pledges measures on stamp duty avoidance
I hope people who have been advising their client to do this have good PI insurance.
I hope people who have been advising their client to do this have good PI insurance.
I imagine he is starting to shit his pants as well as look for a new career.
It has been most amusing looking back over this thread; it looks like I (well, the people who advised me) am going to be 100% correct on this issue.
Uncle Spielberg
Well-known member
I am glad to say none of my clients did it. Not that I have many buying at 500k - £ 1 maybe 1 or 2 a year. I did refer one client a few years back but he was put off by the onerous paperwork. The clients I am speaking to have been written to demanding the stamp duty plus interest.
These people knew what they were doing and it is only right they pay up in my view.
seagullsovergrimsby
#cpfctinpotclub
They wouldn't need any , any sniff of a claim and the company will cease trading. Double Glazing companies have used this trick for the past 40 years.
Not so easy to wriggle out of it if you are a regulated company though (I am assuming these will have been recommended by the less reputable Solicitors/Accountants).
seagullsovergrimsby
#cpfctinpotclub
Depends. I was owed money by an estate agents which folded. Due to a little error the owner had made I was able to pursue the individual for my money ie he was unable to hide behind the limited company. Get yourself a smart solicitor, it pays.