Failure of SDLT Mitigation Scheme - help please?

Annie1960

marlot wrote: »

I think this is the nub of the issue. I do not believe that HMRC or the courts had said it was compliant?

I thought that these schemes were regarded as 'possibly compliant, but subject to challenge'?

Exactly. People were trying to find a way to avoid or evade paying the tax, and now they have been caught.

Annie1960

mrginge wrote: »

Sorry, are you saying that HMRC had specifically confirmed that these schemes were allowed?

Can you provide evidence of that please?

If, as you claim this was an allowed scheme, then why wasn't every man and his dog using it?

I agree. If such schemes were legal, the they would have just done away with SDLT as nobody would need to pay it.

System

marlot wrote: »

I think this is the nub of the issue. I do not believe that HMRC or the courts had said it was compliant?

I thought that these schemes were regarded as 'possibly compliant, but subject to challenge'?

Did HMRC actually challenge any individuals on this? I'm not 100% sure but I don't think they did. Instead they just changed legislation.

System

mrginge wrote: »

Sorry, are you saying that HMRC had specifically confirmed that these schemes were allowed?

Can you provide evidence of that please?

If, as you claim this was an allowed scheme, then why wasn't every man and his dog using it?

When did I say HMRC had confirmed these schemes were compliant?

Have a read of this:

http://www.hmrc.gov.uk/budget2013/tiin-5144.pdf

HMRC here outline the issue and why they have taken measures to change legislation.

The reason 'everyone' did not use it was because the ones with good solicitors would have been advised not to use the scheme. However plenty of people that did use the scheme were never challenged by HMRC.

System

Annie1960 wrote: »

I agree. If such schemes were legal, the they would have just done away with SDLT as nobody would need to pay it.

The scheme took advantage of a loophole. The loophole was closed when the schemes became too popular.

If you are so sure that these were not tax legal then provide some evidence of cases where individuals buying residential properties lost a case to HMRC.

00ec25

Walcott wrote: »

At the point of the OP signing up for the scheme it was tax law compliant. Then in the following tax year there was retrospective change which then went back and clawed back this SDLT from people like the OP..

with respect that is a sweeping generalisation which other readers could misinterpret

at the time in question SDLT mitigation tax law was unproven , it is incorrect to say it was "compliant"

the only aspect that was compliant was the requirement placed on each scheme administrator to notify HMRC that they were operating a scheme.in

HMRC clearly stated that such notification did not constitute HMRC approving the scheme as being compliant/legal. All HMRC were saying was tell us about it and we will look at it later and make a decision at that time (the so called "discovery enquiry") which you may end up contesting in front of a Tribunal if you disagree with us and hope to set a legal precedent

The point Annie1960 is making is that in her view how each scheme administrator conveyed the meaning of them having "notified HMRC" could be seen to be a "scam" if it was presented as an assurance of approval of the scheme itself. True professionals saw that level of ambiguity which is why they never entered or soon withdrew from the market - other less scrupulous firms continued in much the same vein as injury lawyers - here is a (transitory) gap in the market to be exploited for as long as it lasts and we can cover ourselves by either a) insurance or b) liquidation

System

00ec25 wrote: »

with respect that is a sweeping generalisation which other readers could misinterpret

at the time in question SDLT mitigation tax law was unproven , it is incorrect to say it was "compliant"

the only aspect that was compliant was the requirement placed on each scheme administrator to notify HMRC that they were operating a scheme.in

HMRC clearly stated that such notification did not constitute HMRC approving the scheme as being compliant/legal. All HMRC were saying was tell us about it and we will look at it later and make a decision at that time (the so called "discovery enquiry") which you may end up contesting in front of a Tribunal if you disagree with us and hope to set a legal precedent

The point Annie1960 is making is that in her view how each scheme administrator conveyed the meaning of them having "notified HMRC" could be seen to be a "scam" if it was presented as an assurance of approval of the scheme itself. True professionals saw that level of ambiguity which is why they never entered or soon withdrew from the market - other less scrupulous firms continued in much the same vein as injury lawyers - here is a (transitory) gap in the market to be exploited for as long as it lasts and we can cover ourselves by either a) insurance or b) liquidation

While everything you have said is correct, I would have to disagree on the basis that we have more information now than at the time when the OP entered into the transaction.

While you have outlined the technicalities, the reason the OP is in this situation is because of retrospective legislation changes. That is the only evidence of non compliance here. It was HMRC's own decision to change legislation and as far as I can see it never pursued any individuals prior to the retrospective change.

AdrianC

Walcott wrote: »

While you have outlined the technicalities, the reason the OP is in this situation is because of retrospective legislation changes. That is the only evidence of non compliance here. It was HMRC's own decision to change legislation and as far as I can see it never pursued any individuals prior to the retrospective change.

At the time the OP bought into it, it was a scheme of ill-repute and dubious legality.
HMRC took a stand on it, and decided that it was definitely illegal at the time it was being sold, including to the OP. They then decided how to enforce that position. They _could_ have gone after individuals, but - instead - they created a blanket enforcement. There was no retrospective legislation that rendered a legal scheme illegal - it merely clarified the dubious legality as illegal all along.

mrginge

Walcott wrote: »

When did I say HMRC had confirmed these schemes were compliant?

Have a read of this:

http://www.hmrc.gov.uk/budget2013/tiin-5144.pdf

HMRC here outline the issue and why they have taken measures to change legislation.

The reason 'everyone' did not use it was because the ones with good solicitors would have been advised not to use the scheme. However plenty of people that did use the scheme were never challenged by HMRC.

Yes thats lovely.
You did however say that 'it was tax law compliant'

http://www.hmrc.gov.uk/aiu/

Please note paragraph 5. 'HMRC never approves tax avoidance schemes'.
There is nothing retrospective in HMRCs actions, since it is clearly stated and should be understood that those who participate in such schemes are at risk of the loophole being closed and tax becoming due.

System

mrginge wrote: »

Yes thats lovely.
You did however say that 'it was tax law compliant'

http://www.hmrc.gov.uk/aiu/

Please note paragraph 5. 'HMRC never approves tax avoidance schemes'.
There is nothing retrospective in HMRCs actions, since it is clearly stated and should be understood that those who participate in such schemes are at risk of the loophole being closed and tax becoming due.

The fourth paragraph of the link I provided does in fact state that the measures are retrospective. That is directly from HMRC.