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In the Spotlight: HMRC Targets CGT Avoidance Scheme for Landlords

Every so often, HMRC publishes a “Spotlight”—a public warning about tax schemes it considers ineffective or abusive. These notices are a clear sign that HMRC is actively scrutinising certain tax planning strategies, and their latest update, Spotlight 69, is one landlords shouldn’t ignore.

🏠 The Scheme in Question

Spotlight 69 focuses on a capital gains tax (CGT) avoidance scheme involving the transfer of a property business to a Limited Liability Partnership (LLP). The LLP is then put into members’ voluntary liquidation (MVL), with the aim of:

  • Reducing or eliminating Capital Gains Tax (CGT)

  • Avoiding Stamp Duty Land Tax (SDLT)

  • Mitigating Inheritance Tax (IHT)

It’s a strategy currently being marketed to landlords as a legitimate way to exit or restructure property holdings tax-efficiently.

But HMRC isn’t buying it.

🚫 Why HMRC Says It Doesn’t Work

HMRC argues that the scheme is ineffective due to a combination of long-standing tax law and new anti-avoidance provisions introduced in the Finance Act 2025, which specifically target liquidation scenarios involving LLPs.

They believe the scheme fails to achieve its intended tax advantages, and anyone involved is likely to face challenges, penalties, and repayment of tax.

💬 HMRC’s advice: If you’re involved in this scheme, you should withdraw immediately and settle your affairs by contacting them directly.

⚠️ Why This Matters for Landlords

If you’ve been approached with or already involved in a similar strategy, the risks are serious:

  • Unexpected tax bills (including CGT, SDLT, or IHT)

  • Interest and penalties from HMRC

  • Potential investigations under anti-avoidance legislation

These schemes are often sold with confidence, but marketed tax avoidance is a complex and high-risk area—and increasingly one where HMRC is taking a zero-tolerance stance.

🛡️ Our Advice: Don’t Go It Alone

If you’ve been:

  • Approached by a scheme promoter

  • Advised to use LLPs or MVLs for property disposals

  • Unsure whether your current structure could attract HMRC scrutiny…

…please get in touch with us at Merranti. We can:

  • Review the scheme’s legality and risk

  • Help you exit safely and responsibly

  • Liaise with HMRC where necessary to minimise exposure

✅ Stay Safe, Stay Compliant

The promise of tax savings can be tempting—but if a scheme seems too good to be true, it probably is. HMRC’s “Spotlight” series is a clear warning that they are watching and acting.

📞 Concerned about a scheme you’ve seen or used? Contact Merranti today for a confidential, no-obligation review.

Find more from the Merranti Summer Newsletter here

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