Sarah Bradford warns landlords to avoid a scheme designed to avoid tax, which has been the subject of an HMRC ‘spotlight’.
HMRC has recently published a ‘spotlight’ (Spotlight 63) which draws attention to a scheme used by Individual landlords in a bid to avoid tax on their property income and to reduce their exposure to inheritance tax (IHT) and capital gains tax (CGT).
HMRC warns that the scheme does not work, and the arrangements are caught by existing tax legislation.
What is the scheme supposed to achieve?
The scheme claims that by using a hybrid business model, landlords can:
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escape the rules restricting mortgage interest relief for unincorporated landlords letting residential property, securing increased deductions for mortgage interest relief;
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reduce the tax
