Failure of SDLT Mitigation Scheme - help please?

Sulphur_Man

My own case thus far.

Property purchase date: August 2010
HMRC SDLT challenge letter: 23rd July 2014

I received an SDLT 'discovery' letter from HMRC last week, requesting payment of outstanding SDLT, details of the mitigation scheme I used and a 30-day window to respond/appeal. The HMRC letter sites a paragraph of the 2003 Finance Act as the grounds for the claim. The paragraph has multiple regulations, which the letter does not specify.

I passed the letter onto the tax company I purchased the product from, who have responded directly to HMRC with clear points that tax obligations and compliant communications were met at the time of purchase, citing the same section of the Finance Act 2003. The company have taken full control of the appeal on my instruction, without fee. They do not intend to reveal details of the mitigation scheme to HMRC.

The plan comes with a no-win/half-fee agreement. If HMRC successfully overturn the appeal, the tax company will refund half the fee I paid. They have confirmed this.

I went into this scheme with my eyes open. The company spelled out the risk, and advised on ring-fencing funds should it fail. They did express a high degree of confidence in its success. I believe they've dealt successfully with similar letters to the one I've received. Certainly, their robust and incredibly prompt response letter to HMRC (within 48hrs of my contact) is not the stuff of 'cowboys'.

However, I did not expect to receive anything from HMRC after 4 years, considering the apparent nine month window of investigation. The Finance Act of Apr 2013 looked to close various tax loopholes, backdated to March 2012, so again, the letter was a surprise.

I'll post updates as they arrive.

harrys_dad

It would be interesting to compare some people's attitude to avoiding paying large chunks of tax to the stick dished out to JSA claimants in this thread: https://forums.moneysavingexpert.com/discussion/5031538

Conrad

Sulphur_Man wrote: »

I received an SDLT 'discovery' letter from HMRC last week, requesting payment of outstanding SDLT,

Personally I understand that the civilised safe society I have the good fortune to live in, requires ALL of my tax to fund it. Hopefully you wont require the NHS to fund your care one day.


Pay your dues !!!!!!.

Sulphur_Man

Ah yes, the 'fair share of tax' rubbish.

I pay over £50K i/c tax & NI per annum (not self-employed, through a very large IT company). I pay for family BUPA (partly subsidised by my employer), and I intend on sending my two children to fee-paying secondary schools. We've scarecly used NHS beyond obligatory vaccinations since getting married in 2006. I've personally never drawn benefits and been in employment since 1990. I halted child benefits before the law was enforced on my income bracket

Therefore, my family has a small, and getting smaller, reliance on state-funded services.

Another family of four, lower earners, paying say £20K tax a year combined income, will almost certainly require state schools through to adulthood, and full NHS services. Their state-funded 'bill' may well be larger than their tax obligation.

So who's paying the 'dues' !!!!!!?

I mitigated SDLT for the following reasons
1) the credibility of this particular plan and the provenance of the company behind it
2) SDLT is a tax completely broken by the boiling housing market, especially since the 2003 Finance Act.
3) I was prepared to pay if the plan was overturned, and I still am.

What I dont feel, not one iota, is that I've got a free lunch at other peoples expense. One review of my NI number will reassure HMRC on my tax payments for the last 24 years.

giddypenguin

Sulphur_Man wrote: »

Ah yes, the 'fair share of tax' rubbish.

I pay over £50K i/c tax & NI per annum (not self-employed, through a very large IT company). I pay for family BUPA (partly subsidised by my employer), and I intend on sending my two children to fee-paying secondary schools. We've scarecly used NHS beyond obligatory vaccinations since getting married in 2006. I've personally never drawn benefits and been in employment since 1990. I halted child benefits before the law was enforced on my income bracket

Therefore, my family has a small, and getting smaller, reliance on state-funded services.

Another family of four, lower earners, paying say £20K tax a year combined income, will almost certainly require state schools through to adulthood, and full NHS services. Their state-funded 'bill' may well be larger than their tax obligation.

So who's paying the 'dues' !!!!!!?

I mitigated SDLT for the following reasons
1) the credibility of this particular plan and the provenance of the company behind it
2) SDLT is a tax completely broken by the boiling housing market, especially since the 2003 Finance Act.
3) I was prepared to pay if the plan was overturned, and I still am.

What I dont feel, not one iota, is that I've got a free lunch at other peoples expense. One review of my NI number will reassure HMRC on my tax payments for the last 24 years.

The argument is 'I pay quite a lot of tax actually, so don't feel as if I need to pay this particular one'? Doesn't really stack up. Also, just because you don't feel as if you are dependent on the state, doesn't mean you aren't (legal/justice system, emergency services, politicians, national defence).

ceivegz

giddypenguin wrote: »

The argument is 'I pay quite a lot of tax actually, so don't feel as if I need to pay this particular one'? Doesn't really stack up. Also, just because you don't feel as if you are dependent on the state, doesn't mean you aren't (legal/justice system, emergency services, politicians, national defence).

I think Sulphur Man's point is that if he's advised by a mortgage broker (himself regulated by the FSA) and a solicitor that this is a bona fide scheme, why should he think otherwise? ... when you say "pay your dues !!!!!!" do you subject the thousands of people crossing over to France on "booze cruises" to the same level of abuse?

AdrianC

ceivegz wrote: »

when you say "pay your dues !!!!!!" do you subject the thousands of people crossing over to France on "booze cruises" to the same level of abuse?

Perhaps you'd be so kind as to explain what tax is due on personal imports of alcohol from within the EU?

ceivegz

The answer is what ever tax is applicable in the country the purchase is made in -- however, my point is that travellers are simply exploiting a loophole that allows them to avoid paying tax by making purchases overseas--albeit a loophole that is tolerated, accepted and easy to understand.

People involved in these schemes relied (arguably too much) on the counsel of financial and legal professionals who are regulated by their respective bodies. A loophole which should probably have been closed by the government immediately existed and allowed a rogue cottage "tax planning" industry to prosper at the expense of people who while not necessarily wealthy, in most cases already contribute far more tax than most people. This is not an ethical issue -- it is no less ethical to try to minimise your stamp duty liability on the advice of regulated professionals than it is to bring cases of beer over to the UK from France. And the comparison with benefit fraud is simply cretinous.

AdrianC

ceivegz wrote: »

The answer is what ever tax is applicable in the country the purchase is made in

So all applicable taxes are being paid. Glad we're agreed on that.

Which makes it a very different situation to the SDLT "mitigation" schemes, which were a cynical and fraudulent attempt to defraud the Gov't from money under false pretences. How is that so very different to benefit fraud?

ceivegz

How is exploiting a loophole fraud? Also, if anyone has been fraudulent it's not the clients (call them gullible, naive, what ever) but the tax advisors, solicitors and financial advisors who have been marketing, advising and making a lot of money in fees from this so-called "fraud" ... they should be struck off by the Financial Conduct Authority and the Law Society and made to pay back all of the fees collected.