HM Revenue and Customs has the power to investigate cases where it believes people are trying to avoid paying the right amount of tax.
This can relate to stamp duty, capital gains tax, income tax and corporation tax among others.
That is why it is important to choose your mitigation company carefully when trying to avoid paying stamp duty land tax.
HMRC can launch investigations into stamp duty mitigation schemes for a number of reasons. In many cases, it is simply down to random selection.
Other times, investigations can arise thanks to perceived anomalies in SDLT returns or to ensure that the system is working as it should.
What you need to bear in mind is that an investigation does not mean that you are being accused of wrongdoing. Stamp duty mitigation is not the same as tax evasion.
Stamp duty mitigation involves putting together tax planning schemes that are in full accordance with the law and exploit legal loopholes. They are not a way for you to circumnavigate the law.
If your scheme is selected for investigation, you could face the prospect of having to repay underpaid taxes in addition to fines.
In some cases, the stamp duty mitigation company who proposed the scheme will handle the investigation for you. This will depend on the company in question and the arrangement they have in place with you.
With all financial services, it is important to select your provider carefully.
Many mitigation schemes come under investigation from the authorities and it is important when selecting your company that they can demonstrate a 100 per cent track record of defending their schemes against such investigations.
Another important consideration is the availability of insurance.
Having insurance in place can provide a valuable safety net should HMRC determine that the scheme you have employed does not mitigate your stamp duty land tax liabilities.
Also, a good stamp duty mitigation firm will have its own specific legal partners it works with who will be on hand to advise and direct you should your scheme be challenged by the authorities.
These legal partners will be experts in tax law and will have all the tools in place to defend the scheme if necessary.
When you speak to stamp duty avoidance firms, you need to check whether their schemes are scrutinised by top tax experts before they are submitted to HMRC.
This form of quality control is essential, as it means your scheme has been vetted by a top professional who can identify any problems with it and make recommendations which will give you a better chance of having the scheme accepted.
If the company you ultimately decide to work with has no legal teams to help you and does not handle the case on your behalf, it is important to seek legal advice as soon as possible and to submit any documents HMRC has requested from you.
Stamp duty mitigation, it must be stressed, is not tax evasion. If it were, none of these companies would exist.
Rather, stamp duty mitigation is about identifying legitimate ways for you to reduce your SDLT bill.
While you cannot determine whether your case will be investigated, what you can do is select the right company with the right scheme to give yourself the best chance of beating a compliance investigation should one occur.
