The popularity of illegal tax schemes which some landlords are using to avoid a recently introduced Stamp Duty Land Tax (SDLT) surcharge is on the rise, according to a recent investigation by The Telegraph.
HMRC has issued a warning advising investors to steer clear. These so-called ‘stamp duty schemes’ have been on the rise in recent months – many of which are illegal and could see landlords facing prosecution.
These schemes have gained prominence following George Osborne’s introduction of an additional 3 per cent SDLT surcharge on second home purchases in the Budget. Many investors and critics have labelled the surcharge ‘unfair’ since it was first implemented in April.
HMRC have 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 HRMC 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.”
If you’re a landlord, don’t be tempted to use an illegal tax scheme. Instead, speak to an expert to make sure your financial affairs are as tax efficient as possible and compliant with legal requirements, otherwise you could face strict penalties and even criminal prosecution.
Ormerod Rutter Chartered Accountants have a specialist team with experience of helping landlords structure their affairs in the most tax efficient way possible. If you would like further information about how the changes will affect you, please contact us to arrange a free initial consultation.