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. The fall is also likely to be due to 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’.”
Badcock warned however that the figures should not lead property investors to believe that HMRC was “taking a spotlight off the area” and should therefore ensure that their tax affairs are in order. “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.”