The HMRC has won an important legal victory in its battle against tax avoidance by clamping down on schemes used to dodge stamp duty. The case relates to the misuse of “sub-sale relief” which is intended for use by genuine businesses to grant them an exemption from paying stamp duty twice. Developers for example are exempted from paying stamp duty on buying the property and then being charged additional stamp duty on the subsequent sale of the completed home.
The new measures will make businesses think twice before embarking on sub sale avoidance schemes, particularly in the residential market. Businesses looking to employ genuine sub-sale relief are advised to seek professional advice to ensure the scheme will be ratified by the HMRC.