2020-02-17
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Stamp Duty Land Tax (SDLT) avoidance schemes: an update

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Posted by Susan Hopcraft on 06 June 2017

Susan Hopcraft Partner

Were you a client of Hawkins Ryan Solicitors or Benson Mazure Solicitors or any firm of solicitors who advised you to enter in to a Stamp Duty Land Tax avoidance scheme?

In March, we reported on the judgement of the First-Tier Tax Tribunal in the case of Crest Nicholson.

Crest Nicholson Case: Speed read

  • Crest Nicholson, a FTSE 250-listed house builder, sought to avoid Stamp Duty Land Tax when purchasing development land at Hoo Road, Wainscott, Rochester, Kent for the sum of £32,382,120 in October 2006.
  • The house builder should have been liable to pay Stamp Duty Land Tax of £1,295,284.80 on the purchase of the Land instead Crest Nicholson used a Stamp Duty Land Tax Avoidance Scheme.
  • HMRC challenged the arrangement and issued a determination on 23 March 2011 demanding payment of the unpaid Stamp Duty Land Tax (£1,295,284.80).
  • The determination was challenged by Crest Nicholson and fell to be decided by the First-Tier Tax Tribunal who found against Crest Nicholson and for HMRC.

We understand that, subsequent to obtaining judgement in the Crest Nicholson case, HMRC have issued demands to a number of individuals and companies who engaged in Stamp Duty Land Tax Avoidance Schemes.

We are aware that between 2010 and 2013 Hawkins Ryan Solicitors and Benson Mazure Solicitors (acting separately) acted in at least 302 conveyancing transactions involving Stamp Duty Land Tax Avoidance Schemes. Many of these Stamp Duty Land Tax Avoidance Schemes are now the subject of adverse determinations by HMRC. 

Types of Schemes Promoted: Speed read

  • The Husband & Wife Scheme (promoted by Inventive Tax Strategies Limited / Sterling Tax Strategies Limited). This scheme involved a sub-sale from husband to wife (or vice-versa).
  • Unlimited Company Scheme (promoted by Inventive Tax Strategies Limited / Sterling Tax Strategies Limited). This has to be the most widely used scheme and the one we are seeing most often. This scheme involved a sub-sale to a newly formed company which had unlimited liability. The unlimited company was often dissolved following transfer of the property.
  • The Crystal Scheme (promoted by Inventive Tax Strategies Limited / Sterling Tax Strategies Limited).  This scheme involved a sub-sale to an Isle of Man incorporated company which had been established by Inventive Tax Strategies Limited for the purposes of the scheme.

This list is not exhaustive. There were a number of other schemes used and promoted by Inventive Tax Strategies Limited and other such companies.

Both Hawkins Ryan Solicitors and Benson Mazure were the subject of a Solicitors Regulation Authority (SRA) Investigation for their role in the promotion of Stamp Duty Land Tax Avoidance Schemes. The outcome of those investigations can be accessed here:

How we can help

We currently represent a number of clients who were advised to use Stamp Duty Land Tax Avoidance Schemes. We can, and have, assisted clients in negotiating settlement with HMRC following adverse determinations or enquiries.

In addition to helping clients with HMRC determinations or enquiries, where possible, we have also assisted in getting them compensation. Firms of solicitors, such as Hawkins Ryan Solicitors and Benson Mazure Solicitors, who provided advice in relation to Stamp Duty Land Tax Avoidance Schemes, owed a duty of care to provide honest and open advice on the risks associated with entering in to a Stamp Duty Land Tax Avoidance Scheme. Many such professionals provided overly optimistic or no advice on the risks of Stamp Duty Land Tax Avoidance Schemes. In such circumstances, a professional negligence claim may exist.

About the author

Susan is a disputes and professional negligence lawyer, mainly in the financial services sector.

Susan Hopcraft

Susan is a disputes and professional negligence lawyer, mainly in the financial services sector.

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