In the Spotlight
A few times a year, HMRC publishes a ‘Spotlight’. These deal with tax planning schemes that HMRC has become aware of and believes do not work, due to anti-avoidance rules negating their effectiveness. In Spotlight 69, HMRC has warned against the use of a capital gains tax (CGT) avoidance scheme that involves an individual transferring their property business to a limited liability partnership (LLP), which is then put into members’ voluntary liquidation (MVL).
The scheme is being marketed to landlords as a tax avoidance scheme and is intended to reduce or avoid CGT, stamp duty land tax (SDLT) and IHT. However, HMRC believes that the scheme does not work as intended because of various tax regulations and rules, including some anti-avoidance enacted in Finance Act 2025 concerning the liquidation of an LLP.
HMRC’s advice to anyone using the scheme is to withdraw from it and settle their tax affairs by emailing HMRC.
If you have been persuaded to use a tax avoidance scheme and are concerned as to whether it will be challenged by HMRC, please contact us to discuss the best way forward.