High Court blocks SDLT scheme appeal
The High Court has dismissed an attempt to challenge retrospective legislation in the 2013 Finance Bill targeting stamp duty land tax (SDLT) avoidance.
In St Matthews (West) Ltd & Ors, R v HM Treasury & Anor,  EWHC 1848, the plaintiffs sought to challenge the legislation by judicial review.
The claimants were participants in an avoidance scheme created by Blackfriars Tax Solutions LLP that HMRC contended had always been ineffective. The new legislation had merely been introduced to confirms this.
The scheme was a variant of one closed down as part of a wider crackdown on SDLT avoidance enacted by the 2012 and 2013 Finance Acts. The arrangement involved an onward sale - via a transfer of rights or subsale - which was to be completed for a number of years. The intended result of the arrangement was that the immediate purchaser would retain possession of the property, but would bear no SDLT liability while the onward sale was for a low value that attracted little or no SDLT.
The scheme users argued that the legislation had taken away their chance of establishing it was effective before the first tier tribunal.
They sought a judicial review based on alleged infringement of several articles of the European Convention on Human Rights, including Article 1, Protocol 1 (A1P1) and Article 6.
But Judge Mrs Justice Andrews, upon further examination and drawing upon similar cases, ruled that the legislation did not fall foul of those rights.
"Even if Article 6 were engaged, there is little difficulty in reaching the conclusion that the legislation easily satisfies the higher test of compelling grounds in the public interest.
"The interference with the claimants' rights to air their arguments as to the effectiveness of this artificial tax avoidance scheme was proportionate and justified for all the reasons I have already given for reaching that conclusion in respect of A1P1," she said.
She ruled that to get permission for judicial review, the claimants needed to establish their arguments had a "real" prospect of success. In this case, she continued, they fell short of that threshold by a considerable margin.
She then refused permission.
HMRC director general for business tax, Jim Harra, commented: "Our commitment to stop this kind of stamp duty land tax abuse was made clear with the warning given by the Chancellor in Budget 2012 and the introduction of retrospective legislation to tackle the problem in the Finance Act 2013.
“Because of that, it should have been obvious to both promoters and users of this scheme that it could be subject to retrospective action. Our approach to tackling the scheme has now been backed by the courts.”
The Revenue added that the measures are expected to result in an additional £160m of SDLT being collected between 2013 and 2018.