Do SDLT schemes work?

[Barrie Hamilton]

Dear Patrick,

I note that another person has raised a query regarding the use of unlimited companies as a means of avoiding SDLT i.e. A transfers land to the company and the company is wound up and distributes to B.

I note that you did not comment as to whether you thought the schemes were effective. I have looked at this myself and am struggling to get past the anti avoidance provisions that were introduced in 2006.

Can you offer a ray of hope that such schemes do work?

[Patrick]

Barrie, thanks for your contribution. I don’t think that it would be wise to say that a tax scheme works (particularly in the context of a public discussion forum) without detailed discussion of the various pieces of relevant statutory rules and the case law. Any view on a scheme will almost always necessarily be qualified. Hence I am afraid that I cannot give you a simple answer on this. The other aspect to this is of course that so much depends on correctly structuring, documenting and implementing a scheme. However it is legitimate to ask why, as we are nearing the fourth anniversary of the introduction of section 75A, there appears as yet to be no test case seeking to apply the section to the schemes despite what appears to me to be fairly widespread reliance on such schemes.

[Nick Beecham]

The reality is that most advisors are of the view that the scheme is caught by Section 75A. Even before PBR 2006 it was vulnerable under Ramsay given that the structure amounted to the insertion of company which lasted a brief time and for no other purpose than the avoidance of tax.

The brave will rely on the arguing that the first transaction is not a scheme transaction for the purposes of Section 75A if the seller is not aware of the subsequent transaction.

Best wishes
Nick

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