Finance Bill

I beg to move amendment No. 37, page 47, line 21, leave out lines 21 to 25. Amendment No. 37 relates to anti-avoidance measures in this year’s Finance Bill. Like the amendments discussed earlier this afternoon, it is a probing amendment. It focuses on proposed new section 75C, which is a stamp duty land tax anti-avoidance provision that refers to Treasury provisions to make exceptions to its application. My question is whether there are further areas in which avoidance may be taking place. We broadly welcome clause 70, which permanently implements regulations that were approved by the House of Commons in January—until that point, the regulations were valid for only 18 months. We note that those provisions are different from the initial regulations, because they make it clearer how the legislation relates to relief in areas in which anti-avoidance measures should not apply. However, I want to draw the Chief Secretary’s attention to a particularly topical area—special purpose vehicles. I have spoken to people involved in commercial property transactions, and it seems that there has been a clampdown on special purpose vehicles, but there has also been considerable growth in their use for residential properties. On 19 June, The Times stated:"““Figures from Savills, the estate agent which specialises in properties at the top end of the market, show that some 68 per cent. of properties selling for more than £5 million last year went to foreign buyers.””" Part of the problem with SPVs is the fact that people pay a lower rate of stamp duty by buying a residential property through an offshore company. The article continued:"““As a case study, The Times examined the Land Registry records for properties on the west side of Cadogan Square…Of 13 properties looked at, five were held by offshore companies…A further three were registered to companies not listed at Companies House.””" In a similar vein, the Daily Mail reported:"““Latest Land Registry figures show that a total of 827 homes sold for between £500,000 and £1 million in February. A further 207 sold for between £1 million and £2 million…On Bishop’s Avenue in Barnet, one of London’s most exclusive addresses, almost 40 per cent. of the 83 houses are owned by companies or trusts.””" That means that the properties are liable for a stamp duty rate of 0.5 per cent. rather than 4 per cent. The concern is that non-domiciles or people who want to invest in a second home or country estate are using that vehicle, which provides an opportunity to secure massive benefits. Of course, if the property is that person’s primary residence, they would be liable for capital gains tax if they were to purchase and sell in that way. The vehicle is being portrayed as the standard way to buy a high value residential property that is not a primary residence. After looking on the internet for a few minutes, I found a company—I will spare its blushes—which is specifically advertising ways to minimise tax in buying residential properties. It uses the peg of the 2012 Olympics in London to highlight the impact of the Olympics on residential property prices and provides information on how property prices increased in Barcelona, Atlanta, Sydney and Athens. It states that with the correct structure in place, it is possible for an offshore company owner to live in the property on a full-time basis or enjoy occasional use of the property when travelling to the UK without removing the associated tax benefits of offshore ownership. It also states:"““The most straightforward way of holding your investment property is through a private limited liability company””," which it recommends should be an offshore company. It is clearly standard practice for many conveyancing solicitors dealing with high value properties to recommend this as a way of minimising stamp duty payments. Does the Minister think that that should be looked into? Many of the candidates in the deputy leadership election singled it out as an area where there does not appear to be a level playing field. It offers significant savings for those able to understand how these vehicles work and to employ specialists to advise them and for those buying very high value properties, whereas those buying properties at lower prices are paying proportionately much higher rates of stamp duty.