A stamp duty dodging scheme is reportedly costing up to \u00c2\u00a31bn in potential Government revenue from house sales. Research indicates that as much as one in three sales over \u00c2\u00a31m are avoiding the 5% Stamp duty. <\/p>\n
This popular avoidance system involves the use of offshore companies to transfer ownership of a property. In this case, the deeds to a property are transferred to an offshore company who keep it as an asset. This is entirely legal, but it means that when the property is next sold the purchaser has the option of purchasing the offshore company in its entirety and assuming \u00e2\u20ac\u02dcde facto\u00e2\u20ac\u2122 ownership of the property <\/p>\n
Such transactions are corporate, not property, and there is no obligation to pay Stamp Duty Tax. Every time this occurs, therefore, the Treasury loses out on 5% of the agreed price.<\/p>\n
Angela Beech, a senior partner at Blick Rothenberg, has been reported to have said that this form of tax avoidance had increased significantly since the Government pushed the higher Stamp duty rate up from 4 to 5 per cent in April and was a phenomenon particularly common in houses valued at over \u00c2\u00a34m.<\/p>\n
She added: \u00e2\u20ac\u0153It is rife, because with higher stamp duty tax rate the amount that can be saved now is substantial, particularly on the most expensive homes.\u00e2\u20ac\u009d<\/p>\n
Charles McDowell, a Chelsea-based estate agent, has reputedly commented that most of the sales he conducted for wealthy individuals \u00e2\u20ac\u0153were almost always carried out by a foreign company.\u00e2\u20ac\u009d<\/p>\n
The savings for these wealthy property owners can indeed be vast. The sale of a property for \u00c2\u00a350m via this offshore method would save the purchaser, and deny the Government, \u00c2\u00a32.5m in stamp duty. When one compares the loss of \u00c2\u00a31bn in revenue for these properties over \u00c2\u00a31m in value, with the \u00c2\u00a34bn total revenue from stamp duty received by the government last year, the scale of the problem becomes apparent. <\/p>\n
This year Mr Osborne pledged to scrutinise the \u00e2\u20ac\u0153taxation of very high value property where evasion and avoidance are widespread\u00e2\u20ac\u009d. Some would indicate this stamp duty avoidance epidemic as an area requiring significant scrutiny, but stamp duty is not where the evasion begins and ends. One might cite the exclusive One Hyde Park development as an example, where only 9 of the 60 are registered for council tax, a feat achieved in a similar way to stamp duty avoidance \u00e2\u20ac\u201c via offshore holding companies. <\/p>\n
On a separate note, in the recent Autumn Statement it was also revealed that the stamp-duty \u00e2\u20ac\u02dcholiday\u00e2\u20ac\u2122 for first time buyers is to end, as planned, on 24 March 2012 due to the lack of a noticeable affect on first time buyers entering the market. This was an idea originally funded by the 4 to 5% increase in stamp duty for top rate payers, and some will argue that its death is attributable to the fleet-footedness of the UK\u00e2\u20ac\u2122s super-rich and their accountants. On this issue of top level tax avoidance, the Chancellor had nothing to add.
\n29\/11\/11<\/p>\n","protected":false},"excerpt":{"rendered":"