HMRC has warned landlords that an upswing in the number of companies offering seemingly legal ‘tax solutions’ may in fact be illegal.
The schemes, set up in response to the government’s stamp duty rate increase on second homes and buy-to-lets, claim to exploit legal loopholes to allow landlords to avoid the three per cent hike.
But the Revenue has issued a warning that the schemes are generally illegal, and that if caught, landlords will end up significantly worse off than their original position.
Stamp duty tax schemes leave landlords ‘worse off’
An investigation by the Telegraph has found that these schemes are growing in number significantly, following their waning as the tax treatment of BTL properties became more favourable.
The Telegraph spoke to one landlord who was told by one such company that it could save him £16,000, but only on the condition that he pay a £5,000 upfront fee.
In a statement, HMRC said: “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.
“They 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.”
Have you come across any shady ‘tax solutions’? Let us know in the comments section below.