Stamp duty mitigation scheme - is it for real?

BoGoF

My opinion......you got what you deserved.

"I'm not trying to evade tax"............ok then

Oakman

sunshinetours wrote: »

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

Judging by the wording of the letter the latter seems to be the case.... pay the full amount with interest, or appeal... either way (taking into account extra conveyancing costs even VAT) we will be about £1000 worse off as result... (about £5000 if there is no refund from the agent), so not good...

By the way I appreciate all your comments.... and not trying to portray myself as a victim..

GDB2222

BoGoF wrote: »

My opinion......you got what you deserved.

"I'm not trying to evade tax"............ok then

Oh for goodness sake. Nobody needs your sermonising. Have you never in your life made a bad decision?

These guys took a chance to reduce their tax bill, legitimately they were told. They just were looking for advice what to do now. I'm sure they weren't looking for sympathy, but the preaching is unnecessary.

GDB2222

Oakman wrote: »

Judging by the wording of the letter the latter seems to be the case.... pay the full amount with interest, or appeal... either way (taking into account extra conveyancing costs even VAT) we will be about £1000 worse off as result... (about £5000 if there is no refund from the agent), so not good...

By the way I appreciate all your comments.... and not trying to portray myself as a victim..

If they don't want penalties, I'd bite their arm off.

Magrah

These schemes are no different to any other tax or CGT mitigation schemes that exploit current loopholes or interpretation in the legislation offered by all accountancy firms. HMRC are continuing to change legislation to stop these. By the way there are numerous firms still offering these schemes for properties in excess of £250k, some schemes are more robust than others. The big 4 also offer more robust / more complex schemes for the very wealthy which have ongoing running costs.

I think the key here is will the agent repay the fees, but I think in any event we will have to appeal first and then see the outcome, I may be worng but paying now may not be an option. A worry is that not paying the amount now could mean a penalty (or greater penalty) later. Tricky one to call.

Yes if I had it again I would not have bothered as the 9 months enquiry window passed and the money has been spent. As Oakman said the advice was it’s effectively no lose and the worst case would be to pay the SDLT and be out of pocket for some minor costs. Lesson learnt but there will still be a multitude of people round the corner that will take the chance.

sunshinetours

Magrah wrote: »

These schemes are no different to any other tax or CGT mitigation schemes that exploit current loopholes or interpretation in the legislation offered by all accountancy firms. HMRC are continuing to change legislation to stop these. By the way there are numerous firms still offering these schemes for properties in excess of £250k, some schemes are more robust than others. The big 4 also offer more robust / more complex schemes for the very wealthy which have ongoing running costs.

I think the key here is will the agent repay the fees, but I think in any event we will have to appeal first and then see the outcome, I may be worng but paying now may not be an option. A worry is that not paying the amount now could mean a penalty (or greater penalty) later. Tricky one to call.

Yes if I had it again I would not have bothered as the 9 months enquiry window passed and the money has been spent. As Oakman said the advice was it’s effectively no lose and the worst case would be to pay the SDLT and be out of pocket for some minor costs. Lesson learnt but there will still be a multitude of people round the corner that will take the chance.

Agree with most of that apart from the very first bit. Not ALL firms do offer such schemes and these contrived mitigation schemes are VERY different from regular tax planning.
The main difference being that these type of schemes as already mentioned have to be highlighted on a tax return - regular tax planning does not in most cases. Also such schemes are usuaklly designed from the desired result backwards and regular tax planning starts with the facts and works forward if that makes sense - there is a key fundamental difference

The main issue is that it is not just larger firms offering this. Small one/two man band firms have the option via schemes offered by companies such as Probiz to sell these schemes, which attracts fees that such firms traditionally have not had available to them and can be seen as being very lucrative

FTBFun

Oakman wrote: »

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.

We do yes - however SDLT is a very difficult tax to reduce (compared to others) and the only way it has been attempted is via this contrived scheme - which doesn't appear to work.

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.

It obviously isn't legal if you've been sent a discovery notice.

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.

Absolutely - unfortunately the way these schemes are promoted is rather unethical IMO - and you'll find in most cases the promoters are not affiliated with a recognised professional body which is never a good sign.

sunshinetours

FTBFun wrote: »

Absolutely - unfortunately the way these schemes are promoted is rather unethical IMO - and you'll find in most cases the promoters are not affiliated with a recognised professional body which is never a good sign.

Just to clarify many of the "promoters" of these schemes are ICAEW or ACCA firms of accountants which as you clearly know, are certainly VERY regulated

If I've misunderstood and you mean companies such as Probiz who initially offer the conduit for accountants and lawyers into these schemes then I agree

Always be careful who you "get into bed with" I think is the advice here for any professional

JasonLVC

The 'fee refund' guarantee sounds great but all that means usually is they'll refund the fee they charged to arrange the scheme......you are still personally liable for the SDLT and any interest/penalties that was originally avoided.

SDLT avoidance schemes are not fraudulant but they are abusive - so whilst anyone can arrange their affairs as they see fit, if the only purpose of the planning was to avoid a tax then it falls under the abusive definition.

These schemes are disclosed to HMRC for the very reason that HMRC consider them abusive and the promoter can get into trouble if they don't disclose the scheme to HMRC and of course, disclosing the scheme to HMRC simply puts anyone using the scheme right onto HMRC's radar.

timmyt

sorry chaps, but they dont work - www.hmrc.gov.uk/budget2009/dotas-sdlt-1000.pdf