The number of Stamp Duty Land Tax (SDLT) compliance investigations by HMRC has fallen by 75% in the last year, according to research by Boodle Hatfield.
This was a drop from 2,096 in 2019-20 to 529 in 2020-21.
The firm said the drop in stamp duty compliance checks was likely due to HMRC diverting resources away from traditional tax compliance work and towards the administration of the furlough scheme.
Boodle Hatfield said it is likely HMRC is now starting to examine SDLT returns submitted during the pandemic; tax investigations are expected to begin to return to pre-pandemic levels soon.
The firm warned that the applicability of SDLT relief can be subjective, and HMRC may challenge claims by property owners who are not trying to defraud the taxpayer, but are uncertain of how the rules apply or legitimately believe they were entitled to relief.
SDLT enquiries may also detect fraud, where individuals have deliberately made dishonest or inaccurate disclosures in an attempt to underpay or evade the tax.
Kyra Motley, partner at Boodle Hatfield, said: “It is an astonishingly sharp drop in SDLT investigations, especially when set against the boom in residential property transactions.”