Stamp duty mitigation scheme - is it for real?

Oakman

@Magrah

I'm not quite sure how the 9 month period works, from looking at other sites it would appear that HMRC can have up to 6 years and in come cases longer to demand payment.... see here.. (add www.)taxationweb.co.uk/forum/sdlt-mitigation-scheme-t28510-10.html[/url]

I have also called the company... and been told their senior barrister will call me.... apparently there is a "procedure".

To be honest I don't want the grief... the contract said they will return the fee's and if they do I'll just pay the HMRC to get them off my back.

Oakman

Sorry Magrah... just seen your latest post... will pm you

FTBFun

Oakman wrote: »

@Magrah

I'm not quite sure how the 9 month period works, from looking at other sites it would appear that HMRC can have up to 6 years and in come cases longer to demand payment.... see here.. (add www.)taxationweb.co.uk/forum/sdlt-mitigation-scheme-t28510-10.html[/url]

That is correct - 9 months is the normal period by which HMRC can look at SDLT returns - however a "discovery" assessment is available for up to 6 years - which is done where there is a likelihood of a tax loss.

I suspect yours is under the latter provision - and I have a feeling the scheme operators guarantee only goes up to 9 months as they know that HMRC takes longer to enquire into SDLT returns.

Oakman

In the various emails etc... I exchanged with the company one of the claims they made was..

So confident are we of the scheme's integrity that we offer 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.

My concern about this that at this stage a demand for payment has been made or would this be a challenge. In other words the company might not refund anything unless we do appeal.

In the contract I signed it states the following...

Risk
I/We agree that I/we will benefit from operating the process and we have had the opportunity of taking independent advice.
I/we/the company also accept that, should the process be unsuccessful, then the full SDLT may become payable. In that event, THE COMPANY will refund all of its Fees to me/us/the company.
I/we/the company will then use the Fees and the Saving (with accrued interest where applicable*) to pay to HMRC towards the amount notified by them as being payable by me/us/the company.

There is no mention of time limits though.

Magrah

Oakman have replied to your PM.

sunshinetours

The company will undoubedly expect you to appeal. If not basically you are agreeing that you fraudulently tried to gain an advantage by deliberately arranging your tax affairs in a manner that was deliberately trying to deceive the Revenue surely?

People can claim these schemes are for those in the 3% stamp duty threshold if they like but generally they were set up like many tax avoidance schemes for the seriously wealthy - people who can afford to take the risks!

The accountants being mentioned often are members of the Probiz network I believe. Info is out there if you wish to research. As always choose your advisers carefully

Oakman

sunshinetours wrote: »

The company will undoubedly expect you to appeal. If not basically you are agreeing that you fraudulently tried to gain an advantage by deliberately arranging your tax affairs in a manner that was deliberately trying to deceive the Revenue surely?

Not fraudulently... the schemes and the details of the transactions are fully disclosed to HMRC... if not then they would not know about the transactions.

There seems to have been much debate over tax avoidance/mitigation/evasion, my understanding of these scheme is that the work fully within the legislation and is the sort of thing that organisations do legitimately every day...

Only thing is they are alot more powerful than your average Joe Bloggs... In my case I will pay... not because I have deceived the HMRC, but because I don't want the ongoing grief of an appeal/tribunal against a government organisation that has too much to lose and will do everything to get the result it desires.

FTBFun

Oakman wrote: »

Not fraudulently... the schemes and the details of the transactions are fully disclosed to HMRC... if not then they would not know about the transactions.

Probably not fraudently, but negligently.

There seems to have been much debate over tax avoidance/mitigation/evasion, my understanding of these scheme is that the work fully within the legislation and is the sort of thing that organisations do legitimately every day...

The HMRC demand seems to suggest otherwise.

BTW I work in a legitimate accountancy firm and we offer nothing of the sort - despite having clients who are purchasing £1 million+ properties every now and again.

Only thing is they are alot more powerful than your average Joe Bloggs... In my case I will pay... not because I have deceived the HMRC, but because I don't want the ongoing grief of an appeal/tribunal against a government organisation that has too much to lose and will do everything to get the result it desires.

You make HMRC sound like the bad guys here. It is you that signed up to this ridiculous scheme so you wouldn't have to pay your fair share of taxation so you're the one at fault. Although I agree it was probably presented to you in a certain way by the scheme promoter.

sunshinetours

Oakman wrote: »

Not fraudulently... the schemes and the details of the transactions are fully disclosed to HMRC... if not then they would not know about the transactions.

There seems to have been much debate over tax avoidance/mitigation/evasion, my understanding of these scheme is that the work fully within the legislation and is the sort of thing that organisations do legitimately every day...

Only thing is they are alot more powerful than your average Joe Bloggs... In my case I will pay... not because I have deceived the HMRC, but because I don't want the ongoing grief of an appeal/tribunal against a government organisation that has too much to lose and will do everything to get the result it desires.

With respect your interpretation is not relevant - it will be the Revenue's interpretation of the series of events involved in the transaction that decides whether they class it as evasion or avoidance. Full disclosure does not exempt that.

Also if you choose to pay then I cannot see that the company you "bought" the scheme from will be willing to pay any sort of refund.

The fact that you do not understand the scheme and how it could work also works in the Revenue's favour for exactly the same reason you have mentioned. It is also that very same reason that means people should not enter into something like this without understanding the full implications.

You will be facing interest from the original due date and possibly penalties mitigated by original disclosure and cooperation and prompt payment when they have assessed you. I would guess maybe 50/60% although they may under a commercial decision elect to offer a significantly reduced penalty to try and get more people who used the scheme simply to pay up the tax owed rather than "scare" people off with penalties

Oakman

FTBFun wrote: »

The HMRC demand seems to suggest otherwise.
.

Thanks for your comments...

I'd say not necessarily... a person/organisation organising their tax affairs in such a way as it meant they paid only the tax that was necessary is surely nothing new. Obviously the HMRC will fight any scheme like this. Presumably your company helps it's clients who would otherwise know no better and possibly pay more tax than they do now, some of the practices used by your organisation may have once themselves challenged convention.

If it's legal then so be it.... of course if you make a moral judgement over what is a fair share then that's a different matter.

Just to be clear I'm not trying to evade tax... this was a product that seemed good at the time... it doesn't look so good now and I will have to deal with it. I would hazard a guess there are many more people in this situation or considering going down this route so therefore a cross section of views and opinions will be helpful to all.