In light of evidence that Stamp Duty Land Tax avoidance schemes were being widely marketed to businesses and to the public, the Government has taken clear and robust action. This can be seen in a twin approach to driving down SDLT avoidance – legislation to put beyond doubt that these schemes do not work, and wider measures which remove the advantage of delaying payment that those who seek to avoid tax gain over the great majority who pay the right amount at the right time. As a result of this Government’s intervention, SDLT avoidance schemes have largely disappeared and the number of individuals using such schemes has reduced by over 90%.
In 2013, the Government introduced legislation which makes it clear that the SDLT schemes being sold did not work. It also passed legislation which worked retrospectively, requiring users of the most popularly sold schemes to immediately amend their tax returns. This legislation applied to those who had still chosen to enter into schemes despite the Chancellor’s warning against the continuing use of SDLT avoidance in his budget speech of March 2012.
HMRC has consistently challenged the use of these schemes and does not believe that any of them actually achieves its aim of reducing the liability to SDLT. This view has been tested in a number of recent court hearings and HMRC has been successful in every case so far.
To further strengthen the anti-avoidance effort, the Government has introduced additional measures which make it harder for users of tax avoidance to delay paying what is due. From 2014, anyone who has used a scheme where a similar case has already been settled in the courts will be required to accept that ruling or face additional penalties on top of the tax and interest owing. And users of disclosable schemes where there is no such court decision will be expected to pay in advance the amount of tax that they are seeking to avoid while they await a final decision.