Property business loss relief schemes (Spotlight 13)
Published 26 November 2012
© Crown copyright 2012
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The UK government moved to close down tax avoidance schemes which set out to abuse tax relief available to property businesses with agricultural land.
HM Revenue and Customs (HMRC) has evidence that some people have continued to take part in such schemes, after the new legislation took effect in 2012.
HMRC is concerned that these people may not fully understand the serious risks and consequences that may follow as a result of their actions.
HMRC is relentless in pursuing those who seek to bend or break the rules and they will challenge all users of these schemes, regardless of when they entered into them.
The schemes generally involve a series of highly artificial transactions intended to create an artificial tax loss. The loss can be used to avoid tax payable on other income. Although the land itself and the business owning it will exist, the transactions are not part of a genuine agricultural business.
Legislation brought in by the Finance Act 2012 stops relief for such a loss when it arises from tax-motivated arrangements. The legislation applies to transactions or arrangements made on or after 13 March 2012.
The legislation makes it clear that these schemes do not work for anyone who joins or has joined a partnership, in order to reduce their tax liability by claiming property loss relief.
If you are thinking of using one of these schemes to avoid tax, HMRC strongly recommends that you seek independent advice.
Remember, you are responsible for making sure that your tax return is correct.