Within the consultation paper, HMRC have highlighted a number of schemes which market themselves as being able to mitigate stamp duty using a loophole in “transfer of rights” rules, in which a property is purchased by one part and immediately passed onto another before completion.
It is reported within the consultation paper that some schemes have claimed no stamp duty is payable as the initial transaction is disregarded in line with the transfer of rights rules, while there was no consideration paid for the distribution of the property thereafter.
However, HMRC have said that this can be challenged, stating that it does “not agree that the distribution of the property occurs at the same time as the completion” and is therefore not covered by the rules; adding that there are “very good prospects that ‘subsales’ schemes of all types seen to date... can be successfully challenged”.
HMRC continues to say: “A number of promoters of stamp duty land tax avoidance claim that the particular wording of the current rules can be exploited to reduce or eliminate stamp duty land tax.
“HMRC and, we believe many others, consider that the rules when read correctly do not contain the perceived loopholes claimed by promoters of this abuse. It is, however, desirable to improve the legislation to stop such claims being made in the first place.”
For more information, please visit www.milsted-langdon.co.uk
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