Extension of disclosure of tax avoidance schemes to stamp duty land tax
The measure
The disclosure of tax avoidance schemes (DOTAS) regime for SDLT will be changed by regulations to extend the regime to residential properties worth £1 million or more. In addition, arrangements will be introduced for users to report the use of SDLT schemes, for both residential and commercial property, by bringing the SDLT DOTAS rules into line with those for direct tax in respect of HMRC reference numbers. Going forward, users of disclosed residential and commercial SDLT arrangements will need to report the relevant reference number to HMRC.
Who will be affected?
Anyone implementing a scheme in respect of residential property worth £1 million or more, or of commercial property worth £5 million or more, unless grandfathered.
When?
The measure will come into force next year on a date no later than 1 April 2010. Under a general grandfathering provision, a scheme made available for implementation by anyone before that date will not require disclosure.
HMRC view the DOTAS regime as a highly successful means of both identifying tax planning arrangements on a real-time basis and, at a later date, the users of such arrangements.
The changes, which are the culmination of a consultation process initiated in 2007, are a response to the perceived scale of avoidance in residential property transactions and will enable HMRC to challenge or legislate against schemes it considers unacceptable, and particularly those schemes that do not require users to make notification in the land transaction return. The grandfathering provision may, however, have a significant effect in reducing the volume of disclosures required, although it may not always be easy to know, or prove, that it applies.
