In a recent ruling by the Upper Tribunal, property owners who sought to reduce their Stamp Duty Land Tax (SDLT) liabilities through a tax avoidance scheme faced legal consequences. The tribunal found that the buyers of seven properties, dating back to 2010, were liable for SDLT despite their attempts to navigate the system.
The tax avoidance scheme employed by the appellants mirrored the one used in the Project Blue case, concluding in 2018. This particular scheme involved purchasing the freehold of a property from the original owner and subsequently selling it to a Guernsey-based company named Vale Property Finance. The intention was to eliminate SDLT liabilities by exploiting a specific provision under section 45(3) of the Finance Act 2003.
Although HMRC successfully demonstrated that SDLT could not be avoided, the property owners contested the closure notices on two grounds. First, they argued that HMRC did not open valid enquiries into their land transaction returns, rendering the closure notices invalid. Second, they claimed that the discovery assessments issued by HMRC were ineffective under paragraph 28 schedule 10Finance Act 2003.
The legal battle unfolded with HMRC notifying the property owners and Vale about investigations into their SDLT exemption in 2011. Cornerstone Tax Advisors, representing the appellants, responded, challenging the validity of the enquiries. By 2013, HMRC concluded that the scheme used by the property owners did not work, inviting them to withdraw their exemption application or face a tribunal hearing.
In 2018,HMRC issued its statement, asserting that the sub-sale relief was not applicable. Subsequently, the appellants filed amended appeals in 2022 on different grounds, challenging the validity of the enquiries and highlighting Vale's withdrawal of its appeal.
Despite the property owners' efforts, the Upper Tribunal dismissed all appeals in 2023. The tribunal affirmed HMRC's case, emphasizing the similarity of the transactions to those in the Project Blue case. Consequently, closure notices were upheld, marking the end of a prolonged legal battle.
This case serves as a stark reminder of the risks associated with attempting to circumvent SDLT obligations through intricate schemes. To ensure legal compliance and avoid potential liabilities, property owners are urged to seek expert guidance.
Compliance services, such as those offered by Elena Meskhi and Co., play a crucial role in helping property owners navigate the complexities of SDLT regulations. Expert advisors like Elena Meskhi provide tailored solutions, ensuring that transactions align with legal requirements and helping clients avoid the pitfalls of non-compliance.
Don't let SDLT complexities jeopardize your financial standing. Book a call with Elena Meskhi and Co. for personalized guidance on SDLT compliance and ensure a smooth and legally sound property transaction. Reach out today to safeguard your interests and secure peace of mind.
