Failure of SDLT Mitigation Scheme - help please?

giraffe69

You sought to avoid the tax you owed, the tax which the vast majority of house purchasers pay with some scheme which you were told was legally ok. I notice you haven't answered the question about who told you it was legally ok.
You also say this is not a moral or ethical issue and you want advice on whether to pay up or contest. Pay up because otherwise it will become more expensive would be my advice.

haras_nosirrah

out of the 15k

how much was the stamp duty
how much is the interest?

00ec25

pity you did not take independent advice or do your own research when first considering such a scheme

even before your January 2011 transaction the internet had plenty of posts warning that NONE of the mitigation schemes were guaranteed therefore you should have paid more attention to the "insurance" policy you were offered

thread started in 2010
https://forums.moneysavingexpert.com/discussion/2551967

thread started in 2006
https://forums.moneysavingexpert.com/discussion/257374

and research by googling would have produced this from 2009
http://www.taxationweb.co.uk/forum/sdlt-mitigation-scheme-t28510.html#p107327

you relied on the advice you were given by those with a vested financial interest in selling it / signing you up. Even at the time those same people knew there was a risk and that effectively you were gambling

- you have now lost
- pay up and learn from your experience

Pixie5740

I don't think you've got much recourse here if ITS have gone in administration. Have you managed to speak with the broker who advised you about the scheme?

A colleague of mine directed me to one of these SDLT mitigation companies recently and after speaking with the advisor (out of curiosity more than anything else as I couldn't see how it could possibly work) I was left feeling even more sceptical about the set-up so there's no way I'd touch this scheme with a 10 foot barge pole no matter how tempting it sounds.

I think you're just going to have to chalk this one up to experience and take HMRC's offer, even if that means taking out a loan, before the interest and penalties escalate.

Kynthia

I do feel for you a little, but unless you actually got legal advice from a solicitor you were very foolish and took a big risk. In this case the risk didn't pay off. If you did get proper legal advice then you hopefully have recourse with that person/firm.

Annie1960

So you fell for a scam, and paid the scammers £8000 for their advice, and you now owe HMRC £15000.

How much was the SDLT in the first place?

I am not aware of any change of the law relating to SDLT - it has been quite clear for some time what the rates are. I don't understand how you managed to let the scammers persuade you that you could get away without paint SDLT if you purchased a property.

silvercar

As a result, I will have to try to obtain a loan of around £15000, more than £8000 of which constitutes monies paid to ITS Ltd for provision of the (failed) scheme and possibly £1000 of which is interest accrued.

Why do you need a loan to cover the money you paid to ITS Ltd? Surely you have already paid that?

It makes you wonder what ITS did with your money if they are now in administration.

00ec25

Annie1960 wrote: »

So you fell for a scam, and paid the scammers £8000 for their advice, and you now owe HMRC £15000.

How much was the SDLT in the first place?

I am not aware of any change of the law relating to SDLT - it has been quite clear for some time what the rates are. I don't understand how you managed to let the scammers persuade you that you could get away without paint SDLT if you purchased a property.

clearly you have no idea of how the market worked in the last 10 or so years - plenty of people were so persuaded becuase the firms selling the schemes were themselves (mostly) highly reputable professionals (accountancy and solicitors firms). It was only towards the end that the get rich quick bandwagon took off much in the same way that personal injury claim was originally exclusively via a lawyer, now its via dedicated firms employing few lawyers and many pen pushers working off scripts and no understanding

Any such professional was fully aware of what they were doing and some refused whilst others took a commercial gamble that what they were offering was not in itself illegal and so would not directly affect them since SDLT is a self assessment tax and the liability is always with the purchaser not their advisers, although the latter sought of course to cover themselves with insurance

HMRC always had these schemes in their sights and with the pressure on them now to raise money they are (finally) acting. The risk of that was very explicit in the small print of each scheme. None guaranteed that HMRC approved them , all they ever said was HMRC had been made aware of them and it was up to HMRC to decide what it wanted to do about them - well HMRC has now decided, no change in law is required

00ec25

silvercar wrote: »

Why do you need a loan to cover the money you paid to ITS Ltd? Surely you have already paid that?

It makes you wonder what ITS did with your money if they are now in administration.

because he now owes HMRC 100% of the tax due.
Under the scheme he would have paid zero to HMRC and 50% of the "saving" to the scheme (+VAT) hence the total owed is approx 15 - 16 K (incl interest)
so he has lost the 8k originally paid to the firm as it is now in administration and the insurance is null so he has the joy of writing off the money paid to the scheme as irrecoverable and still has to pay HMRC in full so needs a loan as he cannot reclaim the 8k paid to the scheme and no longer has the cash to cover the call

silvercar

00ec25 wrote: »

because he now owes HMRC 100% of the tax due.
Under the scheme he would have paid zero to HMRC and 50% of the "saving" to the scheme (+VAT) hence the total owed is approx 15 - 16 K (incl interest)
so he has lost the 8k originally paid to the firm as it is now in administration and the insurance is null so he has the joy of writing off the money paid to the scheme as irrecoverable and still has to pay HMRC in full so needs a loan as he cannot reclaim the 8k paid to the scheme and no longer has the cash to cover the call

I understand now. I didn't realise that these firms charge as much as 50% of the potential gain.

In theory, shouldn't the insurance policy still be valid even if IDS are in administration? Shouldn't buyers have been given the insurance documents?

I am still puzzled how a company that charges thousands of pounds for a service that (after the initial outlay) is little more than provision of paperwork finds itself in administration. Isn't this dodgy in itself?

As for sympathies, you have lost £8k given that you should have been paying the SDLT like the rest of us did. Agreeing a payment schedule may be the best way forward.