The Treasury will be chasing down on the avoidance of stamp duty land tax on commercial property transactions from the 1^st August 2005.

The government already has anti avoidance legislation but until now this has focused mainly on schemes involving income tax, corporation tax and capital gains tax, although certain stamp duty land tax (SDLT) anti avoidance provisions have been included in finance bills.

However, the new rules specifically target stamp duty avoidance - especially schemes involving commercial property.

The Regulatory Impact Assessment on the new rules states, "There is considerable evidence that stamp duty land tax is being avoided in relation to commercial property."

Many SDLT avoidance schemes make use a series of transactions, only the first of which is a land transaction, while the others involve the sale of a company.

The new regulations require disclosure of SDLT tax avoidance schemes involving commercial property with a market value of £5 million or more. The new rules won’t apply to schemes used solely for residential property.

The Treasury estimates that there are currently around 1,000 SDLT transactions a year for commercial property of this value, amounting to just 1% of the total number of commercial property transactions.

Penalties of up to £5,000 will be imposed for non-disclosure of the targeted SLDT avoidance schemes, with further fines of up to £600 per day for continuing failure to disclose.