Stamp duty land tax return closure notice

caldi9

Hello,
my aunt bought a property in 2013/14 and was advised on the stamp duty land tax. The advisory firm/partner has retired in the meantime. HMRC sent her a letter saying that the claim to relief isn’t valid and that tax is due. 

It’s a significant amount that HMRC claims to be due (£50k).

- Can she dispute the closure notice at all? If and how please?

- Can the advisor and the firm be held liable after all?

Thank you

user1977

Retiral doesn't make a difference to liability, if the advice had been negligent (we can't tell from what you've said whether it actually was negligent).

If she wants advice on whether it was negligent and/or whether HMRC are correct, she should really seek an alternative professional advisor.

Might help if you told us what sort of relief we're talking about.

caldi9

I wasn’t part or involved in the purchase, but from what I understand relief was claimed under code 34, pre completion transaction. HMRC claim that the advisor used SDLT avoidance arrangements to exploit schedule 2A of the finance act 2003.

What is the course of action? Consult a tax advisor first and then challenge HMRC and or the original advisor? 

All of this happened a decade ago, shouldn’t HMRC be challenged for such a delay?

AskAsk

Sounds like one of those tax avoidance schemes that have been caught up by HMRC.  I saw a TV program many years ago that said rich people don't pay stamp duty because they use tax avoidance schemes.

user1977

If there's £50k at stake presumably she ought to be getting professional advice (and has enough money to do so....).

Was the original advice that this would definitely work? Often they are wary about guaranteeing anything with the avoidance schemes which haven't been tried and tested, so no negligence if it turns out HMRC disagree.

Bookworm105

caldi9 said:

All of this happened a decade ago, shouldn’t HMRC be challenged for such a delay?

by implication of the size of sum involved and the way you refer to her having taken advice, no.
HMRC are perfectly entitled to come after people who used avoidance schemes that subsequently unravel even a decade later since the scheme would not have received legal approval at point of use.

Most of those schemes were sold on the basis they hoped their interpretation of the law was correct, but no court had yet passed judgement on who was right: the scheme or HMRC.

GDB2222

Bookworm105 said:

caldi9 said:

All of this happened a decade ago, shouldn’t HMRC be challenged for such a delay?

by implication of the size of sum involved and the way you refer to her having taken advice, no.
HMRC are perfectly entitled to come after people who used avoidance schemes that subsequently unravel even a decade later since the scheme would not have received legal approval at point of use.

Most of those schemes were sold on the basis they hoped their interpretation of the law was correct, but no court had yet passed judgement on who was right: the scheme or HMRC.

Would HMRC be claiming penalties and interest, so the £50k might be around 3 times the original SDLT? 

DullGreyGuy

Given the timescales involved HMRC appear to be accusing you of a deliberate tax evasion as an administrative error or carelessness would have been time barred by now whereas evasion can be pursued for 20 years 

Does the advisory firm still exist even if the partner you dealt with has retired?

Do you recall what the scheme was?

mybestattempt

caldi9 said:

Hello,
my aunt bought a property in 2013/14 and was advised on the stamp duty land tax. The advisory firm/partner has retired in the meantime. HMRC sent her a letter saying that the claim to relief isn’t valid and that tax is due. 

It’s a significant amount that HMRC claims to be due (£50k).

- Can she dispute the closure notice at all? If and how please?

- Can the advisor and the firm be held liable after all?

Thank you

The closure notice should be read in full as it will explain in detail how to appeal the notice and the time limit to do so, usually 30 days.

However, your aunt may want to take advice on whether an appeal would succeed or fail.

The reference to a closure notice suggests an enquiry into the SDLT return was opened many years ago and has remained open until HMRC established the SDLT avoidance scheme did not work and having done so, they have now closed the enquiry.

As this is a closure notice, HMRC does not have to prove your aunt or her advisor were careless or acted deliberately, an incorrect return was made and the tax liability is your aunt's.

If HMRC were to charge a penalty in addition to the tax due from the closure notice then they would have to show careless or deliberate behaviour.

SDLT_Geek

caldi9 said:

Hello,
my aunt bought a property in 2013/14 and was advised on the stamp duty land tax. The advisory firm/partner has retired in the meantime. HMRC sent her a letter saying that the claim to relief isn’t valid and that tax is due. 

It’s a significant amount that HMRC claims to be due (£50k).

- Can she dispute the closure notice at all? If and how please?

- Can the advisor and the firm be held liable after all?

Thank you

Perhaps your aunt used a subsale scheme like the one described in the Brosch v HMRC case https://caselaw.nationalarchives.gov.uk/ukftt/tc/2023/945 ?