According to the Sunday Times, the loophole involves registering the property in the names of companies rather than people, though those involved may have other reasons for choosing company ownership.
Mittal lives in a mansion near Kensington Palace, West London, which has a jewel-inlaid swimming pool and parking for 20 cars, and is decorated with marble from the same quarry as the Taj Mahal.
The property has been owned by Laken Properties since June 2004, when it was bought by Mittal for GBP 57.1 million.
Mittal also has a second property in Bishops Avenue, Hampstead, known as The Summer Palace. It was purchased by a company called Spalace in 2002. Both Laken Properties and Spalace are dormant British companies.
The Mittal family declined to comment but it is understood that stamp duty was paid at the time of purchasing the properties.
Bob Geldof, the Live Aid organiser, and Zac Goldsmith, the Tory MP who prides himself on his green credentials, are among those who have followed this route.
A home registered in the name of a company allows the owner to simply sell the shares in the company rather than the property itself.
The company shares attract 0.5 per cent in stamp duty rather than the 5 per cent levy to be imposed next month on houses costing more than GBP 1 million and sold the traditional away.
Under the loophole, a house worth GBP 20 million attracts a stamp duty of GBP 100,000 for the next owner rather than GBP 1 million. This means the current owner can offer it for a lower price or share the savings with the purchaser.
The tax authorities believe the avoidance scheme is already being used on many expensive homes and cost the exchequer GBP 40 million a year in lost revenue. Treasury officials fear the practice will increase when the stamp duty rises next month.
Owners set up a company, often in a tax haven such as the British Virgin Islands or Panama though it doesn't have to be offshore, to buy a property and initially pay the full stamp duty. But when the owner decides to sell the property, he sells shares in the company rather than the property itself.
Saif Gadaffi is among those who have properties held in offshore companies. He bought a GBP 10 million home in Hampstead, West London, in the name of a company registered in the British Virgin Islands.