Inland Revenue To Enforce Tighter Stamp Duty Regime

by Jason Gorringe, Tax-News.com, London

02 December 2003

The Inland Revenue has introduced a new stamp duty regime as of December 1 which aims to crack down on attempts by both businesses and homebuyers to avoid paying the tax.

The new rules known as 'stamp duty land tax' are primarily aimed towards stopping companies using techniques to avoid the levy by tightening the rules so that stamp duty has to be paid when money changes hands. The Revenue hopes this will put an end to a practice known as ‘resting' where a firm pays for a property, but does not file all the paperwork to legally complete the transaction, thus avoiding the duty.

However, the new rules will also target residential homebuyers who agree to pay an inflated price for a house’s fixtures and fittings to reduce the overall purchase price of the house and keep it below a stamp duty threshold.

Whilst the new rules do not mean any changes to the stamp duty rates themselves, it requires the homeowner to file a self-assessment outlining the details of the sale which must be lodged with the Revenue within 30 days of completion. Failure to comply will result in an automatic fine of £100, rising to £200 after four months. The taxman has also been given the power to investigate house sales up to nine months after completion.

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