Are there any SDLT avoidance schemes?

Home Forums Patrick Cannon Are there any SDLT avoidance schemes?

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    Juanita Rogers
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    I’ve just been sent a paper and some advice from our solicitor which reads:

    “This paper was tabled by HMRC at a meeting last Monday.
    What is interesting (apart from the fact that none of the SDLT schemes that HMRC have so far examined work, in their opinion) is that they have started to compare land registry applications with SDLT returns and investigate when they find a discrepancy.
    A local SDLT expert was also told on Monday that over 100 assessments were being issued this week to taxpayers who had used schemes, and that a few hundred more are in the pipeline.
    A scheme devised by Counsel (a transfer to a 99% partner who subsold into a partnership that had been specifically formed for the purpose – claiming almost total exemption) went before the tribunal a few weeks ago and I believe the tax at issue is over ?300,000. A decision is expected in late February, apparently three other similar cases are likely to come before the tribunal this Spring.
    The answer is therefore we do not know of any successful schemes and would be reluctant to suggest one.” She then attaches a paper signed HMRC Stamp Taxes 110110

    Does this bring an end to all your suggested mitigation schemes, or do you still have possible suggestions for those wishing to avoid SDLT where possible?

    Regards, Juanita Rogers

    #656 Reply
    Patrick
    Guest

    Juanita, we shall have to await the outcome of the tribunal decision in the case you mention and then take a view on how the decision affects the interpretation and application of the SDLT rules. It is interesting that the case involves a pre-section 75A transaction.The cases that are being issued with discovery assessments at the moment will of course need to be considered carefully by advisers – some of the schemes I have been shown plainly did not work technically (as I believe the promoters concerned may have already conceded) and taxpayers who relied on those particular schemes should consider conceding and paying-up. HMRC’s litigation and settlement strategy seems to be in a state of flux at the moment with the policy makers now saying that we have misunderstood it all along and it is about achieving a sensible result (Vodafone?) rather than litigating to the bitter end cases in which they think they have a 51% or better chance (see the recent Tax Journal pieces by HMRC). This message hasn’t reached the operations end of HMRC yet hence the reference in one of the papers you referred to a “relentless” pursuit of taxpayers who “bend” the rules. A good example of the “relentless” approach is at [2010] STC 763 at 775 para 43 where Norris J refers to: “the blustering intransigence of the other [HMRC] and its determination to litigate everything to the bitter end.” It may be that tone of recent pronoucements on SDLT will have become more emolient by the time some schemes reach the review stage as operations people attend the relevant internal training and the so-called “misunderstandings” about the lss are explained. There are also schemes that are technically sound and are worth defending regardless of how reasonable or unreasonable HMRC behave towards them.

    #657 Reply
    James
    Guest

    Patrick. What is your latest view on these schemes? Have HMRC now closed these loopholes in what seems like a pretty clear tax? There seem to be many companies offering the SDLT mitigation service but not much information around as to the real risks the purchaser runs and how successful the schemes are in practice. Thanks for your advice.

    #658 Reply
    Patrick
    Guest

    James, I think that the future of SDLT mitigation lies in bespoke planning with the advice given by an adviser who can cover the other potential direct tax and VAT consequences. I’m afraid that I can’t agree that the tax is “pretty clear” – it’s badly drafted and in parts far too complex and has a general anit-avoidance rule which raises more questions than it answers.

    #659 Reply
    Khalid Rashid
    Guest

    Dear Patrick,

    Has there been any updates from HRMC regarding further changes to the SDLT mitigtaion scheme?

    What are the usual timscales for HMRC to enquire and complete an SDLT Scheme

    Thank you.

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