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Hi Sam, your recollection is accurate but I have been unable to find the statement to which you refer in the SDLT manual. The statement is however reproduced in Sergeant and Sims on Stamp Duties at AA1.13 although of course it relates to the old sub sale rules in section 45 which did not contain a tax avoidance filter unlike the current sub-sale rules in Schedule 2A FA 2003, para 18. If your client or their purchasers require certainty then they could always pay the SDLT and also ask that the transfer be adjudicated as not chargeable with stamp duty.
James, you are correct to be sceptical. The partnership share for these purposes is the share of trading profit not capital: see https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm33400 The reason given to me by HMRC many years ago was that they thought that the share of trading profit was less open to manipulation than the share of capital.
Hi, do you mean para 2(2)(d)(iii) of Schedule 6A? I have recently spent a day in the tax tribunal discussing the meaning of “occupy” with HMRC and the decision is likely to be published in the near future. Although the case was in the context of Schedule 4A and not Schedule 6A it is clear to me from that hearing that HMRC are likely to challenge the type of situation you describe particularly in the light of para 8(3).
I think that is correct but have you considered purchasing flat 1 on day 1 and flat 2 on day 2 in linked but separate transactions? They would at least avoid the higher rates on the first although they still cannot get first time buyers relief. The apportionment calculation for SDLT would be as set out in 4.26 of my Tolley’s Stamp Taxes 2019/20 edition.
Hi Michael, sorry to hear of this and as you may know CDP is now defunct. The scheme that you used has to my knowledge not yet been tested in the tax tribunal so it may be worth persisting and hoping that another taxpayer has their appeal heard first so that you can then better judge your chances of success. It sounds as though HMRC were in time to issue you with their discovery assessment back in 2014. Despite HMRC’s win in the Supreme Court in Project Blue the application of the anti-avoidance rule in section 75A may not be straightforward in your type of scheme.
John, once HMRC have given you notice of a compliance check within the 9 month and 30 day period from your purchase they are allowed to take more than 6 years to complete the enquiry even if they go quiet in the meantime.
Sadly for you a compliance check notice counts as a notice of enquiry so it sounds like HMRC are still in time to claim even though it seems quite wrong for them to have waited six years.
John, HMRC can claim after 6 years as long as they originally sent you a notice of enquiry within 9 months and 30 days of the date of your purchase or there was either no SDLT return or some form of “deliberate” ie blameworthy conduct concerning how the SDLT return was filed. If this is the type of CPD scheme where HMRC are claiming double SDLT I would suggest that you resist as HMRC are wrong to do so.
Beverley, my advice would be to avoid an outright gift of the money and instead lend it to your parents interest free and secured by way of a simple charge over their house. This keeps the value with you and avoids any potential complications on their passing if there were any other claims on their estate and when you inherit you can discharge the loan. A simple short form loan agreement and charge is all that you would need by way of documentation and a local solicitor could deal with this for you and register the charge.
Christopher, yes the main residence replacement exemption will apply because para 3(6)(b) Sch 4ZA recognises that the sale of the old main residence can be by one spouse only as long as they were living together.
Amy, I haven’t come across this before and it seems that section 53 does not address the issue. My initial thoughts are that the correct way to approach this issue is to apply the reasoning of the Court of Appeal in Pollen Estate Trustee [2013] STC 1479 and view this as the sale of the equitable estate in undivided shares by the co-owners to the company and use the same purposive construction to say that section 53 applies “to the extent that” the seller is connected ie in a sense a reverse of the effect of Pollen which was to permit the transfer to benefit from the charity exemption “to the extent that” the purchaser was a charity.
Drew, I understand the “reverse Ramsay” point to mean basically that if you apply the Ramsay principle to the two step scheme you collapse it so that there is only one tax charge. It’s the same result as applying the “Ramsay” principle as enacted in section 75A where you distil the scheme down to one sale from V to P. Ramsay is a principle of statutory interpretation so it applies regardless of whether HMRC wish to or not. There are now appeals in before the tax tribunal over the legitimacy of the second charge and some may be heard later this year.
Steve, I think that a good case can be made for the common land being non-residential even if HMRC were to argue that it subsists for the benefit of the house and garden, and so Table B ought to apply. By the way I have recently had two cases where HMRC have suddenly and unexpectedly abandoned their challenge to mixed use prior to having to draft their statement of case, in cases of houses with large grounds and so I would encourage taxpayers to appeal and notify the appeal to the tax tribunal where appropriate and see what then happens.
Simon, thanks and yes I have one at the moment that is slowly working its way through to tribunal and am advising on others at various stages. It is very difficult to predict the chances of success given the unpredictability of the appeals process and the attitudes of different judges. I am heartened generally though by this week’s Tax Journal which reports a successful tax judicial review ( R on the application of Vacation Rentals (UK) v HMRC [2018} UKUT 383)), a successful appeal against SDLT late filing penalties (SA Jagger v HMRC [2018] UKFTT 623) and a successful appeal against an APN penalty (K Graham v HMRC [2018} UKFTT 661). There is hope yet to lift the gloom of these dark December days!
Nicky, in answer to your questions:
1. If you wish to pay then I would lodge the SDLT under cover of a letter stating that the payment is made without prejudice and is made in respect of the entire matter and only in order to stop interest running.
2. No the interest is not contestable and is payable on the tax ultimately found to be due.
3.It would be safer to appeal both transactions as you do not wish to settle the first one and then be unsuccessful with the second.
4. The hearing is a matter of public record and i am not aware of any other live appeals in this type of scheme but that is not to say there aren’t any.
5. As far as next steps go I think you need a specialist barrister to review the case documentation in detail and advise you on the merits of an appeal and I think this forum is not really the appropriate place for that sort of detailed advice.Do let me know if I can assist you further off-line as it were.
