Tax clawed back from probes into suspected unpaid stamp duty reached a five-year high this year, reveal exclusive figures obtained by City A.M.
The tax man recouped an average of £113,400 from each investigation it launched into unpaid stamp duty in 2020/21, shows data secured through a Freedom of Information request submitted to HMRC.
The data indicates most of the tax yielded from stamp duty investigations is typically sourced from wealthy people purchasing high-end homes.
The number of investigations launched by HMRC slumped to a five-year low of 529, down almost fourfold from the previous year’s tally of 2,096.
Despite the marked drop off in investigations, HMRC’s recouped cash from stamp duty investigations stayed broadly in line with the four-year average annual tax take from investigations of £60.5m.
This suggests a large proportion of investigations into unpaid stamp duty are typically opened into higher valued property transactions, while most of the additional tax revenue clawed back by HMRC is from posher postcodes.
The introduction of the stamp duty holiday – which raised the threshold at which the tax is applied to £500,000 – excluded the low end of the market from being subjected to the scope of a HMRC investigation for most of this year, causing investigations to plummet.
The SDLT holiday is estimated to have triggered a seven per cent rise in house prices from June 2020 to February 2021, adding £17,265 to the price of the average home in England.
According to the latest Halifax house price index, UK house prices increased 7.6 per cent annually in July to £261,221, meaning the average buyer would not have been subjected to stamp duty before the holiday changed at the end of June.
In June, the number of homes bought and sold reached a record high of 213,120 as buyers scrambled to beat the stamp duty taper deadline.
HMRC said they have taken a “customer-first approach” to tax investigations during the Covid crisis and have “usually only opened a new enquiry into customers who can engage in and resolve the enquiry.”
In response to a request for comment from City A.M., an HMRC spokesperson said: “Throughout the pandemic, HMRC’s priority has been to deliver support to protect people’s livelihoods and support businesses. We have prioritised tackling serious fraud and criminal attacks on the tax system, while continuing wider activity to make sure individuals and businesses pay the right tax.”
“Our approach is to identify where tax is most at risk of not being paid and design targeted and proportionate interventions to address it, which has led to an increase in compliance yield per cases opened.”