Another interesting SDLT scheme case

https://financeandtax.decisions.tribunals.gov.uk/judgmentfiles/j12577/TC%2008636.pdf

Didn't find your answer?

I think this judge gets quite a lot wrong. For example, in para 51(1) the requirement for an MDR claim is in s 59 FA 2003 (not Sch 6B). Her reasoning that the legal position of the property (at completion) trumps its physical nature is questionable to put it mildly, as if that were right anyone could (subject to s75A and Ramsay perhaps) sell their house at non-residential rates using essentially the same method in this case (a bit like how ToGCs are sometimes contrived with a nominal third-party lease).

https://financeandtax.decisions.tribunals.gov.uk/judgmentfiles/j12577/TC%2008636.pdf

An iffy looking decision overall, and it's very surprising the taxpayer did not engage a tax barrister considering the large sums at stake.

Judge for yourself here:

https://www.dailymail.co.uk/news/article-2862318/Yours-750-000-Summerhou...

Replies (12)

Please login or register to join the discussion.

By Ruddles
25th Nov 2022 14:58

I don't think that it is just the judge that has her references mixed up.

Thanks (0)
Replying to Ruddles:
avatar
By Justin Bryant
28th Nov 2022 09:54

Yes; well spotted. S59 relocation relief itself got relocated here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdlt...
https://www.cronertaxwise.com/community/tqotw-sdlt-relocation-employee/

So the (MDR claim) section (immediately before s60) is s58D (and there is no s59 anymore).

I believe the judge's point is that Sch 6B is engaged here by s75C; not by s58D, so the relief was available, even though not claimed in the usual way or in time. But assuming that's right, she seems to have overlooked s75C(2), which is expressly subject to the relevant relief terms/restrictions (and presumably no MDR claim was made in time or at all).

Thanks (0)
Replying to Justin Bryant:
By Ruddles
28th Nov 2022 11:10

Not sure that I follow you, Justin (I assume that your first reference to 75C ought to have been 75A?)

Are you suggesting that the making of a claim is one of the terms/restrictions referred to in 75C(2), so that if a claim has not been made the relief mentioned in 75C(2) would not be available? If so, that would seem to be a nonsensical argument, given that s75A et seq is dealing with a notional transaction. I can think of very few circumstances in which a taxpayer will have made a pre-emptive claim in respect of a notional transaction arising under anti-avoidance legislation.

It seems to me that there is a (perfectly reasonable) presumption that with respect to the notional transaction the taxpayer would have made a clam to any reliefs that would have been available to him. In other words, the terms/restrictions referred to at s75C(2) are those restrictions etc affecting the relief itself, rather than the mechanics of claiming the relief. That is certainly the view that HMRC seem to take at SDLTM09300.

Thanks (0)
Replying to Ruddles:
avatar
By Justin Bryant
28th Nov 2022 11:34

This s75A SDLT GR link says nothing of the sort. https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdlt...

Indeed, it agrees with me and states (re s75C(2))"The availability of a particular relief will be subject to the terms and restrictions of that relief."

You are being a bit optimistic if you think HMRC (or the courts - ignoring this particular judge) are that generous in their interpretation of anti-avoidance legislation. For example, HMRC fully expect taxpayers to file s 75A notional txn SDLT1s and so one can assume they fully expect claims (where necessary under s75C(2)) re the same.

Thanks (0)
Replying to Justin Bryant:
By Ruddles
28th Nov 2022 12:43

We will agree to disagree, then, given that you have cited the same guidance that I did. You say that the guidance agrees with you - but all you have done is repeat what the legislation/guidance says. You argue that those terms etc include the mechanics of making a claim, I contend that they refer only to the applicability of the relief itself.

As I say, we can agree to differ, although you are right on one point - I do prefer to live life with my glass half-full.

Thanks (0)
Replying to Ruddles:
avatar
By Justin Bryant
28th Nov 2022 12:47

Noted, and let's see if HMRC (or the taxpayer possibly if badly advised) appeal this dodgy looking decision and we can continue the debate then.

Thanks (0)
Replying to Justin Bryant:
avatar
By Justin Bryant
14th Feb 2024 13:13

As predicted by me, HMRC appealed and the taxpayer lost comprehensively: https://www.gov.uk/tax-and-chancery-tribunal-decisions/the-commissioners...

QED (in fact, the FTT judgment was even more iffy & dodgy than I first thought).

However, it seems to me that s75A did not apply because the (equally iffy & dodgy) scheme did not work in the first place and that's all badly explained by the UT.

At least the taxpayer engaged a tax barrister this time around.

Thanks (0)
Replying to Justin Bryant:
By Ruddles
14th Feb 2024 14:19

Justin Bryant wrote:
As predicted by me

I'm not sure that I would describe "let's see if HMRC ... appeal" as a prediction.

And I suspect that we will have to continue to agree to disagree as I have no idea what your "QED" refers to.

Thanks (0)
Replying to Ruddles:
avatar
By Justin Bryant
14th Feb 2024 14:30

I love the way you refuse to be proved wrong, despite incontrovertible evidence to the contrary. PNL and WP would be very proud of you I'm sure.

Thanks (0)
Replying to Justin Bryant:
By Ruddles
14th Feb 2024 14:36

I might be right, I might be wrong - as might you be, but I would say that you have proved nothing. Where is the incontrovertible evidence to which you refer?

Thanks (0)
Replying to Ruddles:
avatar
By Justin Bryant
14th Feb 2024 14:58

I just love it (appropriate for today I suppose).

Thanks (0)
Replying to Justin Bryant:
By Ruddles
14th Feb 2024 15:08

Justin Bryant wrote:

I just love it (appropriate for today I suppose).

QED, indeed

Thanks (1)