SDLT Mitigation Scheme

[section 44]

A lot of questions. The answer to many of your questions (1, 4, 5 and, to an extent, 3) depends on exactly what scheme is being used (they are not all the same and consequently the legal analysis is not always the same).

On 2, generally for SDLT purposes HMRC has an enquiry period of 9 months commencing (usually) with the SDLT return filing date. However, if HMRC makes a "discovery" of an underpayment of tax then they can issue an assessment for up to 6 years after the transaction (often referred to as a discovery assessment). Some scheme shops purport to close-off the discovery risk by voluntarily submitting additional information to HMRC with the hope that this would prevent HMRC from later making such a discovery. The effectiveness of such practice is untested with regards TO SDLT. The leading authority (Veltema) on subject of disclosure (in a different context) suggests that a large amount of information and a high technical quality of disclosure is required - even if willing, this may be beyond the capabilities of your average scheme shop and your average professional advisor. For completeness, an assessment can be issued for up to 21 years after the transaction in the case of fraud or negligence.

With regards to 3, if no SDLT has been paid to HMRC and HMRC properly assess that it is due then the SDLT due, interest thereon and any penalties would be due for payment to HMRC irrespective of what was paid in fees to the scheme shop.

If you have so many concerns and questions, I suspect that artifical tax avoidance isn't for you. Potentially, you could legally save money by using a scheme but you risk ultimately paying out far more than you would have otherwise done and you risk uncertainty for a long period of time.

[Convey with me]

SDLT planning may provide enormous financial benefits to clients buying property over £250K and above. At a recent Law Society event (November 2010) it was mentioned that the real benefits start at purchases over 1 million pounds. However, with the current economic climate lingering the scheme may be of interest to a much wider audience and is available from some providers for purchases of £250K and above. There are certain 'stipulations' to adhere to with each of the schemes, of course, of which should be made clear by the provider.

It's impossible to go into any real depth on any one scheme here but here are some highlights of what we would expect a client to see in any particular plan:

1).        That  a scheme has been running for a good length of time (even with amendments).
2).        That its proven to work in  a good number of cases.
3).        The planning is backed by a robust Counsel’s Opinion given by leading Tax Counsel.
4).        That the plan has been disclosed to HMRC and has a corresponding scheme disclosure number ensuring that it is fully compliant with HMRC requirements for tax planning.
5).        That any queries by the Inland Revenue have been promptly and easily satisfied.
6).        That the saving from the scheme is substantial.
7).        That there is a ‘no-win-no-fee’  undertaking, via which all fees are fully refunded to the client in the event of a successful challenge by HMRC.
9).       That the scheme is low risk and non-aggressive and does not involve either the vendor or the lending institution involved in the transaction or effect their title, security or ability to realise funds from the sale of the property.

This tax planning can seriously improve your wealth by providing savings of up to 50% on Stamp Duty, it is worth exploring. You may be aware that a certain national newspaper ran an article (2009) about the previous (Labour Party) government's use of SDLT planning which saved them £210,000 in stamp duty land tax.

It is important to note that with this tax planning, a specialist conveyancing solicitor is a crucial link of it's success. Most conveyancing solicitors generally will not or have not taken the time to properly review the planning and most importantly the council's opinion and as a result may advise against the schemes due to lack of knowledge.

Hopefully this has been useful. In response to the '1 minute guide to posting', it seems we are encouraged to leave our contact details and give a little idea of how we my be able to help with subjects posted ...so here goes...

Convey With Me work with several solicitors in law firms across England and Wales and provide the necessary 'link' to the successful completion of the conveyancing where SDLT planning takes place. In addition, as a response to requests of newly referred clients, we are also able to refer new cases to one of our preferred tax planning professionals who will assist with this tax planning for purchases from 250K. Convey With Me. Please call 0191 645 2868. E: sonja@conveywithme.com

[section 44]

That its proven to work in a good number of cases.

I'd be interested to know what (if anything) the proof is