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SDLT Tax planning? Legal? Anyone done it recently?

Hi Guys,
I am looking to buy a new family house. Basically, we are having to cut down and we are doing this by all big family together taking a huge mortgage and live together as we expect this to generate alot of savings.

We have seen a house and have got other things in place but looking at the stamp duty in the region of high 4% sounds very high. I have read over the last few days about tax planning companies like murberry hamilton etc who work around this.

My question is
1. do people recommend doing this?
2. Are there any future sales implications on this?
3. How many people have done something similar and would recommend?
4. What should I look out for?
5. Has anyone used this company or any other company?


Your advise would be extremely welcomed as this is very important and as it is it is a strech to get 4 large families into a single house.

Thanks in advance.
:A

Comments

  • Radiantsoul
    Radiantsoul Posts: 2,096 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    I think if it were that easy everyone would be doing it.
    Such schemes are usually pretty expensive, and the government are closing these loopholes.
  • FTBFun
    FTBFun Posts: 4,273 Forumite
    Have a search in this forum and the "cutting tax" one. You'll see that these schemes rarely work.
  • JQ.
    JQ. Posts: 1,919 Forumite
    edited 12 August 2011 at 1:29PM
    I believe they do work initially, BUT I believe HMRC are now going back through all past transactions done on this basis and reclaiming their tax. Those people caught up in it presumably paid the 2% fee to the consultants and are now paying a further 4% SDLT. There are some threads on here about it.

    I'm guessing the consultants don't offer a money back guarantee - because lets face it, if it was legal and above board, that's exactly what they would do if they were confident of their own abilities.
  • FTBFun
    FTBFun Posts: 4,273 Forumite
    JQ. wrote: »
    I believe they do work initially, BUT I believe HMRC are no going back through all past transactions done on this basis and reclaiming their tax. Those people caught up in it presumably paid the 2% fee to the consultants and are now paying a further 4% SDLT. There are some threads on here about it.

    I'm guessing the consultants don't offer a money back guarantee - because lets face it, if it was legal and above board, that's exactly what they would do if they were confident of their own abilities.

    Just to clarify on this one - they "work" initially because the SDLT form is a self-assessment form and technically HMRC are relying on you being honest on it.

    However HMRC have pretty strong powers to go back and examine these forms in some detail and that is what is happening now.

    What you'll find is that the scheme promoters will "guarantee" that HMRC won't look into your form for about 9 months after submission (which is the general power HMRC to enquire into these forms) but will not mention that HMRC have another 6 years to look into it.

    My advice would be to avoid these schemes entirely.
  • Hi guys,

    I have been tracking your responses to Alag20’s initial post. I am going to be completely up-front. I am actually an SDLT adviser and I echo and agree with many of the comments posted by the respondents. The simple truth is, is that there is no easy way to mitigate SDLT and, whilst some schemes have been successful in the past, the vast majority of web-based retail providers of these schemes actually do not play by the rules. That is not to say they break the law but they are somewhat disingenuous in their claims about the number of cases they have done, the number of successes and the lack of enquiries from HMRC.

    The reason for this is that, in order to be certain that a scheme has succeeded after the normal enquiry period (10 months), you have to have fully “disclosed” the scheme. This means that you have to have sent in a letter accompanying the Return explaining what you have done and inviting HMRC to disagree if they think they should do so. Of course they are going to and, in my experience, enquiry rates in such schemes are nearing 100% - they are not actually 100% because I suspect that HMRC’s internal systems mean that they lose some of these letters.

    If a letter like this is not done you cannot be certain the scheme has succeeded after 10 months and in fact have to wait up to four years and so I would avoid any adviser that does not require such a disclosure.

    Moreover many of these retail houses are not in fact tax advisers at all – I mean, the key questions here are:

    1. Are you professionally qualified?

    2. Do you have professional indemnity insurance to cover any acts of negligence?

    3. Do you hold a Counsel’s opinion and may I see it?

    4. Do you weight any of your fees towards success, i.e. do you wait 10 months for the balance of your fees?

    In my experience a lot of these providers do not do this and, for this reason, and if they offer a full “insurance-backed fees refund” I would avoid them because you simply cannot guarantee that they are going to be there.

    The next thing you need to consider is whether you are going to be the one that wants to do this sort of planning. In my experience people who are not used to understanding the risks and returns involved and particularly are nervous about getting into HMRC’s bad books should not do this. You should always go into this knowing that there is no certainty of outcome merely a degree of probability and, considering all the above, you still wish to undertake the planning you need to be sure that the adviser is going to take responsibility for dealing with any HMRC enquiries. Whilst you may get correspondence from them during the enquiry it should always be a responsible adviser’s position that they will deal with this – and many of the retail providers do not. In short choose a suitably qualified professional adviser, able to implement a scheme properly, who has the requisite professional experience and a back-up from Counsel and, having said all that accept that there is a probability that you will not win and then you are ready to do SDLT planning; indeed, any other kind of tax planning.

    I hope you found my comments useful.
  • 00ec25
    00ec25 Posts: 9,123 Forumite
    1,000 Posts Combo Breaker
    this topic comes up at least once per week - heres one of the better threads including someone now having to repay £9k in tax
    Hi guys,

    The reason for this is that, in order to be certain that a scheme has succeeded after the normal enquiry period (10 months), you have to have fully “disclosed” the scheme.

    the time limit is actually 9 months for the disclosure enquiry window
    If a letter like this is not done you cannot be certain the scheme has succeeded after 10 months and in fact have to wait up to four years and so I would avoid any adviser that does not require such a disclosure.
    err ?
    its 6 years for the "discovery" window (or unlimited timescale if they can show reasonable grounds to suspect deliberate fraud)
  • In response to the questions over my responsive thread. I apologise for not being clear – you are quite right that the time is 9 months, but it is 9 months from the “relevant filing date” which is 30 days after the date of completion so, for the sake of convenience, we generally describe it as 10 months. Note that if you go beyond 30 days to file your SDLT Return then the 9 months runs from the date that the Return is filed. Since most people talk in terms of completion dates especially non professionals we tend to use the 10 month term rather than the 9 month one.

    In relation to your comment on 6 years for discovery – it was shortened to 4 years in April this year and I think if you check the statute you will find I am correct. As to unlimited well, we were talking in context of schemes that are legal and have a good basis in law i.e. with Counsel’s Opinion. We agree that it is actually limited to 21 years in the case of fraud or unreasonable conduct.

    Hope this clarifies things.
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