Taxman targets stamp duty dodge

Stamp duty can add thousands to the cost of buying a house

The Inland Revenue is planning a fresh crackdown on homebuyers who try to avoid paying their full stamp duty charge.

Backed up by new disclosure rules, the Revenue may investigate residential property transactions that stop just short of the £250,000 threshold which divides the basic 1% rate of stamp duty from the higher 3% rate.

The move is aimed at discouraging homebuyers who artificially keep the declared purchase price of their house below the £250,000 cut-off point by paying over the odds for fixtures and fittings.

Thousands of homebuyers whose property was sold for a figure close to a stamp duty threshold may find that the sale comes under the microscope Chas Roy-Chowdhury, Association of Chartered Certified Accountants (ACCA)

The Revenue will be able to scrutinise such transactions more closely thanks to a new self-assessment form, which will from 1 December require all home buyers to provide full details of the sale.

The sale will go through as usual, with stamp duty being paid to the government on completion.

Business tax target

But the Revenue, using the information revealed by the new filing system, will be able to investigate the sale for up to nine months after the deal has been done.

Homebuyers found to have structured the sale so as to avoid the higher rate of stamp duty may be faced with an unexpected tax bill.

"Over time thousands of homebuyers whose property was sold for a figure close to a stamp duty threshold may find that the sale comes under the microscope," said Chas Roy-Chowdhury head of taxation at the Association of Chartered Certified Accountants (ACCA).

However, the Inland Revenue's real target are companies rather than individuals, according to Mike Warburton senior tax partner at accountancy firm Grant Thornton.

"Lots of businesses plan in order to minimise the amount of Stamp Duty they pay. It's the affairs of these firms that the Revenue sees as a potentially lucrative area for further investigation," Mr Warburton said.

Those with questions about stamp duty can ring the Inland Revenue helpline on 0845 60 30 135.