Lawful and unlawful tax dodging on the most expensive properties
Is it any wonder that there is growing outrage in the majority of the population against the super-rich. Being successful and clever is to be applauded but the richest also often know how to manipulate the rules to their advantage and find loopholes.
This, in turn, can fall into 2 categories, the tax-dodging tactics which may be considered somewhat immoral but which are legal, and those which are both immoral and illegal.
Taking the first category, a block of some of the most expensive flats in London are being sold off with the prospect of little or no stamp duty revenue being paid – how is this possible / well, what happens is that apparently each property was set up under a different company when leases were granted by the developers. The buyers of the flats are then able, if they so choose, to simply buy the shares in the limited company to gain ownership of the property, and will not have to pay stamp duty.
The second category is frankly outrageous – reports this week suggest that only around 15% of the flats sold in the luxury development are paying council tax. The difficulty for the Local authority is that it is very difficult to find out who actually owns these flats since most of them seem to be owned by offshore entities and the cost of trying trace the ownership of these properties, even if successful, could be disproportionate to the amount owed. The principle of this type of tax dodging is outrageous as well as illegal.
Putting all this into context:-
- The flats in question range from £3.6- £136 million.
- The Liberal Democrats claim that up to £750 million of stamp duty is being dodged each year