There has been a sharp drop in the amount of unpaid stamp duty land tax (SDLT) collected by HMRC over past year, which was a third of the previous year’s total, suggesting the crackdown on property-based tax avoidance schemes is having an impact, according to law firm Collyer Bristow
HMRC’s counter avoidance directorate, which is focused on marketed tax avoidance specifically, brought in £92m in unpaid SDLT over the last year, down from £301.2m the year before.
James Badcock, partner at Collyer Bristow, said: ‘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 their intention to litigate against SDLT avoiders.’
Badcock also suggested the drop in unpaid tax collected indicated 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”,’ he said.
Badcock warned that HMRC is likely to continue to shine a spotlight on this area of activity, saying: ‘Whilst in many cases there may have been a legal justification for transactions which allowed an SDLT liability to be avoided, HMRC can be expected to continue to challenge schemes and anyone who is concerned at all should now seek advice.’
