Buy-to-let incorporations and Spotlight 63 fallout

Following on from Dan Neidle’s and my article ‘Landlords beware’ (Taxation 26 October 2023) on HMRC’s Spotlight 63 (tinyurl.com/hmrcspotlight63) and a mixed corporate partnership structure which HMRC have pointed to as a ‘scheme’ this article reflects on why some buy-to-let (BTL) landlords have been attracted to such structures why practitioners have differing views on standard incorporations of BTL’s into a single limited company and what the next steps are that landlords under the scheme can expect from HMRC.

Context

Ordinary BTL incorporations are often difficult.

There are three key difficulties to surmount for a tax efficient ordinary incorporation of a BTL into a company – capital gains tax stamp duty land tax and where there are mortgages extra-statutory concession D32. The combination of factors makes it uncertain or just impossible for many BTLs to meet the conditions for a...