Professional Advice Bureau - avoiding Stamp Duty?

tractorsaint · 15 April 2010 at 7:43PM

My IFA has surprised me this time! I'm about to purchase a property for over £250k and along with the Suitability report, mortgage application form etc. there's a PDF for the "Professional Advice Bureau". It doesn't give too much away but, from what I'm reading, suggests that you only pay 1.5% + VAT for fees to this company and SDLT can be avoided. It goes on to mention about the risks and potential HMRC challenges but has anyone got any more detail behind this company?

It would seem that you have to sign confidentiality agreements before proceeding but as I'm only enquiring at the moment I haven't signed anything so can freely post !

Thanks in advance
TS

shaven-monkey · 15 April 2010 at 8:40PM

tax evasion. what could possibly go wrong?

may be legit but that company is less than 5 months old.

socrates · 15 April 2010 at 8:51PM

shaven-monkey wrote: »

tax evasion. what could possibly go wrong?

may be legit but that company is less than 5 months old.

and being mentioned by someone who has been here for 5 minutes

tractorsaint · 15 April 2010 at 8:58PM

socrates wrote: »

and being mentioned by someone who has been here for 5 minutes

Whilst I'm sure it's usual to be a little reserved on an internet forum, I have been using this site for many years, have emailed with Martin direct and can assure you I have nothing whatsoever to do with PAB above. I am just curious about this company and whether it's something to look into or just avoid like the plague.

Given the original response from the helpful poster, I've checked out the domain name and see that it has indeed only been around for 5 months.

Based on their literature stating that they have "2,500+ cases processed in the last three and a half years" and, if that were the case, I'd have expected to be able to find them somewhere on the internet I think I'll give them a miss this time (4k saving just isn't worth it to me for the risk!)

JasonLVC · 15 April 2010 at 8:59PM

http://www.taxationweb.co.uk/forum/sdlt-mitigation-scheme-t28510.html

Link to another forum where the subject is discussed.

There is no 'secret' how these work, the firms offering these tax planning schemes just don't want you to figure it out for yourself or allow competitors to run the same scheme.

Post 2 on the forum link above explains the basic concept of these schemes. They are not without risk as they are, for all intent and purpose, contrived and designed to avoid SDLT. The final post is a warning that these schemes are 'sold' hard but are short on the risks. Greed always overcomes good sense in tax matters and remember, the advice firm is making a nice chunk of profit at your risk.

New penalty regime kicked in 01 April 2010 meaning that if you use these schemes and you are picked up by HMRC, you will be liable for a minimum of 70% if you have deliberately avoided the tax (100% penalty if you try to conceal the avoidance), so you avoid £5k but if caught have to pay the £5k back plus upto another £5k penalty.

So whilst these schemes technically work (after all, they are recognised by HMRC as disclosable schemes), they fall down under scrutiny, in the same way the blatant scam that is "VAT Optimizer" for gas installers.

tractorsaint · 15 April 2010 at 9:33PM

JasonLVC wrote: »

Post 2 on the forum link above explains the basic concept of these schemes. They are not without risk as they are, for all intent and purpose, contrived and designed to avoid SDLT. The final post is a warning that these schemes are 'sold' hard but are short on the risks. Greed always overcomes good sense in tax matters and remember, the advice firm is making a nice chnk of profit at your risk.

The final post has put the nail in the coffin for me:

"To be successful, 6 years would have to have elapsed since completion of the property purchase and submission of the SDLT return."

I want to enjoy my new property, not be worried for 6 years whether the tax man is going to knock on the door!! It's not worth it.

Thanks Jason, excellent advice.

FraudBuster · 15 April 2010 at 9:45PM

Based on their literature stating that they have "2,500+ cases processed in the last three and a half years"

From Companies House:

Name & Registered Office:
PROFESSIONAL ADVICE BUREAU LIMITED
7 LYNWOOD COURT
PRIESTLANDS PLACE
LYMINGTON
SO41 9GA
Company No. 07013266

Status: Active
Date of Incorporation: 09/09/2009

Country of Origin: United Kingdom
Company Type: Private Limited Company
Nature of Business (SIC(03)):
None Supplied
Accounting Reference Date: 31/03
Last Accounts Made Up To: (NO ACCOUNTS FILED)
Next Accounts Due: 31/12/2010
Last Return Made Up To:
Next Return Due: 07/10/2010

JasonLVC · 16 April 2010 at 11:28AM

The Director of PAB is also a Director of :-

http://www.newforestonline.co.uk/default.asp - an online business directory.

http://www.silverstreetmarketing.com/ - some sort of marketing and promotion business for IFA's.

Are we talking about the same Professional Advice Bureau Limited as I wonder if the OP's PAB is not a Limited company and just a partnership or similar (and thus not registered at Companies House)? Failing that, it would then appear that PAB have branched out from website design to doing SDLT planning schemes (or more likely using one of their own IFA clients to do the work for them for a cut of the profits).

IntheKnow · 31 August 2010 at 1:46PM

I have explored these schemes for the past 4/5 years and the companies do have different quirks that you should be careful with. This scheme mentioned is through a limited company of a limited company and the combined company I believe has processed a couple of thousand cases.

They operate a no win no fee operation and also a no charge if you lose your property. Personally I think they are one of the better more transparent companies in this niche area, however you have to be aware of the issues and risks when entering an arrangement like this. Financial Advisers will not be giving you advice in this area, so I would not rely on compensation from that sector if it goes wrong, however a good IFA should have awareness and have done some due diligence on pitfalls of the scheme. Sadly the problem will be that most of the introductions will come from Mortgage Brokers and I am never convinced that as a whole that limited sector of advisers have the depth of knowledge to assit clients with complex areas!!

JasonLVC · 15 September 2010 at 2:05PM

Frugalfiz wrote: »

I've just tried to use this scheme but it entailed the setting up of a limited company and the vendor's solicitor refused to enter into a contract with a limited company with no assets. If they needed to sue for breach of contract, there would be no assets. We did try and do this very late in the legal process, but if it was planned from the beginning of negotiations it could probably work by exchanging and completing on the same day - if the vendor's solicitor will go along with it. My IFA works for a very professional organisation and sorted this with Professional Advice Bureau and he wouldn't deal with anyone dodgy so I am sure they are ok if all is planned correctly.

Although there is a lot of criticism to these schemes to avoid tax - remember how much tax has been paid along the way to earn enough to be able to afford a property is this bracket...??

Tax avoidance is tax avoidance.

If you have to set up a Limited company with the sole purpose to avoid SDLT then it is a contrived scheme, notifiable and open to attack from HMRC.

As for your IFA, I am sure their advice was 100% altruistic and they didn't get a commission/kick-back for recommending the scheme and they only suggested this route out of their genuine need to help you save money.;)

Marco_Xtra_Strong · 18 April 2011 at 9:30PM

In the last 2 years 72 clients of mine have used the service, 12 have had a challenge in the 9 month window and none have been successful. One failed at outset and this is the only one where the client insisted on their own solicitor.

Around 3 out of 5 people that i have talked to turn this down.

When i first came across the process i was hugely sceptical, especially on the fines and interest side of things so i checked this out with HMRC.

The max fine for this is £200 plus 8% interest over the 9 months, HMRC can only come back over a 6 year period if you have knowingly evaded tax in other areas, and if you have done that, silly billy, they can then open up everything and go back 21 years if they suspect Fraud.

What i find is that this is not for everyone but the ones that go for the Tax Plan are those who have a large amount of money that are aware of ways around paying tax already and this is just another extension of that.

I completely understand why people think it must be a scam but in my experience if you havent been trying to evaid paying income tax over the years the risk is very minimal as the process is fully insured with no upfront outlay.

You cant blame people, i mean 20k of tax for a 500k house, at least !!!!!! Turpin had a mask.

Professional Advice Bureau - avoiding Stamp Duty?

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