Home › Forums › Patrick Cannon › Should I appeal an SDLT mitigation scheme?
- This topic has 26 replies, 2 voices, and was last updated 25th April 2019 at 12:50 pm by Justin.
We used SDLT mitigation scheme from CDP to purchase our house in 2013 which apparently involved a lease and a sale on the same day. We have just received an SDLT assessment from HMRC demanding two lots of stamp duty, one for the lease, and one for the purchase. I’m resigned to paying one lot of SDLT plus interest – is there any chance of appealing the double hit ?PatrickGuest
David, that does sound painful. Normally HMRC assess the different legs in an SDLT scheme but these are in the alternative and they only look for one lot of tax. Do you think that could be the case here or are they definitely looking for two lots of tax?DAHGuest
Yes, they’re definitely after two lots of SDLT, they sent us two letters – at first I thought they were duplicates but afraid not.PatrickGuest
In principle (and depending upon the actual details of the scheme you undertook) the SDLT charge should not exceed that on a single acquisition applying either the Ramsay approach or the statutory anti-avoidance in section 75A that both look at the end result and ignore the steps in between.DAHGuest
As a layman I’m not 100% sure on the details of the scheme but I think it is roughly (a) partnership is set up with us having 1%, (b) lease granted to partnership for premium equal to purchase price, (c) partnership immediately sells their 99% interest to us.
HMRC have 2 different assessed amounts for SDLT – for 99% and 100% of the purchase price.PatrickGuest
Looks like a composite transaction to me on which only one lot of SDLT arises. HMRC may be trying to intimidate you into settling.DAVID HOUGHGuest
I’m OK with settling on one lot of SDLT (seeing as the mitigation scheme has not worked) but is it worth appealing against the other assessment – or would paying one assessment be an admission of liability on both assessments ??PatrickGuest
Without knowing the details of the scheme you undertook it is not possible to say. However I would appeal both initially and on a without prejudice basis ask if they are open to accepting one lot of tax plus interest in full and final.Justin BryantGuest
There is HMRC guidance here re potential double SDLT:
Have others that have posted seen this article?
Was wondering if anyone has reached a conclusion on this matter with HMRC?Patrick CannonGuest
Nicky, this was based on an opinion of another barrister that had been forged after he refused to issue it. I have just drafted a notice of appeal to HMRC for another user of this scheme. In my view it is legally (and for what it is worth, morally) wrong for HMRC to be pursuing two lots of SDLT here and i would expect to defeat the second tax charge should this matter proceed to a hearing before the tax tribunal. It is very important that users get their appeals in on time as in my experience a lot bury their heads in the sand (perhaps understandably) and only try to make a late appeal when the debt enforcement team comes calling and by then it is too late.Nicky’s FosterGuest
Mr Cannon many thanks for your comments in my post. Having also been involved in the CDP scheme I am fast approaching my appeal deadline and having had very mixed advice feel more confused than ever!! To log an appeal can one write in ahead of the deadline and note that an appeal is being made so as to get that in on time and then follow up shortly thereafter with the substance of the appeal or do bothe have to be done simultaneously?PatrickGuest
Nicky, if you wish to appeal all you need do at this stage is indicate that you wish to appeal one or both of the determinations that have been issued to you and give one of the permitted reasons that should have been stated in the HMRC letters.There will be opportunities later on in the process to expand on your reasoning. I think that with these schemes it may be sensible to accept the higher of the two amounts of SDLT but contest the other one however that is a matter for you to take professional advice on.AlpsGuest
Hi, I also used CDP in January 2014 involving the lease and sale on the same day.
A week ago I received two separate charges from HMRC for the SDLT and interest. One for the sale and one for the lease. I am happy to pay the SDLT on the Purchase (higher charge) but should I also be charged for the lease SDLT as well?
What is the outcome if I appeal the second charge? Looks like the cases above are all similar. On what grounds can I appeal the second charge?
I haven’t contacted HMRC yet but would like to do so this week. I have just over 3 weeks to before my deadline.
Thank you!Patrick CannonGuest
Alps, thank you and I cannot really add anything to the comments above. I think it would be sensible for you to seek professional advice to deal with the drafting and submission of your appeals.