Posted: 09 June 2010
Issue: Vol 165, Issue 4259
Categories: Update, News, Land

HMRC offer view on artificial depressing of sale price

HMRC have published Spotlight 10, which concerns a scheme intended to avoid stamp duty land tax (SDLT).

The aim of the scheme is to reduce the purchase price of a commercial or residential property below the SDLT tax band or threshold. In some cases an intermediate sale, often on the same day as the principle sale, is introduced to remove the true purchase price from tax.

These arrangements seek to use sub sale relief, which is intended to ensure that, where a property transaction happens in stages, SDLT is paid once on the full amount paid for the property by the person who ultimately acquires it and no double charge arises.

The taxman’s view is that these transactions, including those involving sub sales, produce a charge to SDLT on the full amount paid for the property. In some cases there is doubt about whether transactions actually meet the conditions for the sub sale relief.

Even if they do, anti-avoidance legislation effective from December 2006 counters arrangements seeking to depress or avoid the tax on the full amount paid for the property, including those seeking to exploit sub sale relief

The Revenue says it will challenge property sale arrangements that have been artificially structured to avoid paying the correct amount of SDLT, through the courts where appropriate.

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