Spotlight 69: HMRC targets landlord tax avoidance schemes

A tax avoidance scheme being marketed to landlords as a way to transfer rental properties to a limited company and avoid tax is the latest scheme targeted by HMRC. 

The arrangements 

The scheme typically involves an individual landlord incorporating a Limited Liability Partnership (‘LLP’), transferring their properties to the LLP, putting the LLP into a members’ voluntary liquidation and subsequently selling the properties from the LLP to a limited company owned by the landlord. 

The scheme claims to avoid Capital Gains Tax, Stamp Duty Land Tax and, potentially, Inheritance Tax. However, HMRC’s view is that this type of arrangement does not work. 

Next steps 

Individuals who have used arrangements of the type described in Spotlight 69 are strongly advised to withdraw from the scheme and seek tax advice. HMRC is likely to impose interest and penalties, but taking proactive steps now may significantly reduce these liabilities. 

At Affinia, our dedicated Property Tax team is on hand to review your position, assess any previous planning, and help you take the necessary action to mitigate risk and exposure.