Duff online SDLT advice

It's everywhere

Didn't find your answer?

I just read this and thought it's garbage and indeed it is if you read the case (which relates only to SDLT penalties and not SDLT liabilities):

https://www.taxinsider.co.uk/whats-the-purpose?inf_contact_key=945ed0134...

https://www.bailii.org/uk/cases/UKFTT/TC/2020/TC07944.html

 

Replies (61)

Comments for this post are now closed.

Psycho
By Wilson Philips
27th Sep 2021 12:14

Indeed. I have found, over the years, many Tax Insider articles to be highly entertaining. Problem is that there will be many readers that don't "get the joke".

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Replying to Wilson Philips:
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By Justin Bryant
27th Sep 2021 12:25

In this case the worrying thing is that the author writes reputable tax text books. I wouldn't have bothered mentioning it otherwise. Perhaps it's ghostwritten.

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By charteredtax
27th Sep 2021 13:54

As the author of the article in question, I thought I should respond to the criticism of it.

Firstly, it is correct for Justin to say that the case on which the article was based (Forest Commercial Services Ltd v HMRC) was an appeal against penalties for an alleged inaccuracy in an SDLT return. I did consider mentioning this fact. However, the effect of the decision was that there was no penalty as there was no inaccuracy. The significance of the case lies in the reason why the SDLT return was considered to be incorrect.

The article highlights exceptions to the 15% higher rate SDLT charge in FA 2003, Sch 4A. The appellant's return was not considered to be inaccurate because the tribunal considered that one of those exceptions applied, namely that the property was acquired for the purpose of redevelopment.

The article merely highlights one of the circumstances where the above exception was considered to apply (hence the SDLT return was not incorrect), which in practice may not be uncommon in respect of small, owner-managed or family companies. This was the reason for writing the article.

Justin, you are of course perfectly entitled to your opinion. But before you label someone's work "garbage", perhaps you might consider the possible effect that such an opinion might have on the author.

Thank you.

Mark McLaughlin

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Replying to charteredtax:
Psycho
By Wilson Philips
27th Sep 2021 14:56

I do not usually leap to Justin's defence, but the article is at best misleading. The appeal, as we all acknowledge, was against penalties. You did not - deliberately it would seem - refer to this once during the article. Any reader of that article would be perfectly entitled to conclude that the appellant had been successful in setting aside the higher-rate charge.

"However, in Forest Commercial Services Ltd v Revenue and Customs [2020] UKFTT 470 (TC), a claim for exception was allowed under the third bullet point above"

That is again, at best, misleading but bordering on being plain wrong. There was no claim for exception - the return might initially have been submitted on that basis but it was accepted afterwards that the exception did not apply.

The case was not so much about the exception itself but about the consequences of a change of intention and whether or not the conditions for exception existed at the time of filing the return. The article makes absolutely no reference to that point.

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Replying to Wilson Philips:
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By charteredtax
27th Sep 2021 15:01

Thank you for your comment. As I said, there was no penalty because the tribunal considered that there was no inaccuracy, and there was no inaccuracy because the tribunal considered that the relevant exception from the SDLT higher rate charge would have applied at the time of the claim.

The whole point of the article was to highlight the existence of the exception to the 15% charge. And the tribunal did consider that the exception was relevant. The tribunal had to consider whether the exception applied as part of its decision.

I am not averse to constructive criticism, and I take on board your comment about the sentence you quoted from the article. But that sentence that does not constitute "duff advice" or render the article "garbage" - the 'practical point' from the article and the underlying message still holds good.

Thank you.

Mark McLaughlin

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Replying to charteredtax:
Psycho
By Wilson Philips
27th Sep 2021 15:38

I take all of that on board, Mark (and this discussion will only help to highlight the existence of the exception!), but the fact remains that any reader of that article, without having also read the case decision, would be perfectly entitled to conclude (and in my opinion probably would conclude) that the FTT had, in allowing the appeal, decided that the 15% rate did not apply (at all) despite the fact that the directors had moved into the property. I do consider that a request for a correction/explantion to the article is quite justified.

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Replying to Wilson Philips:
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By charteredtax
27th Sep 2021 17:39

Thanks for your comments, which are duly noted.

The article covered one specific point, which was the existence of one of the exceptions from the 15% charge. And at the end of the day, that underlying message is unaffected.

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Replying to charteredtax:
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By User deleted
27th Sep 2021 15:39

I don't think that any critic needs to "consider the possible effect that such an opinion might have on the author."

That sounds like "snowflakery" to me. "My poor feelings".

A critic should, of course, be sure that their criticism is justifable. Just as an author should be sure that their articles are correct and are not misleading before sending them off to print.

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Replying to User deleted:
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By charteredtax
27th Sep 2021 17:42

I'm afraid you have misinterpreted the comment.

But please feel free to think whatever you like.

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By The Dullard
27th Sep 2021 14:00

Er... by my reading of the two, the article exactly summarises the conclusion of the tribunal. That (paragraph 92) the SDLT return (prepared on the basis that the 15% rate did not apply) was correct and that, therefore, there could be no penalty.

That Justin lacks the capacity to understand the decisions of the tribunals and courts is a thing that he demonstrates time and time again.

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Replying to The Dullard:
Psycho
By Wilson Philips
27th Sep 2021 15:05

The Dullard wrote:
by my reading of the two,

That's my point - you need to read both the article and the case decision. If you hadn't read the decision what - truthfully - would you have concluded (about the case) having read the article? ("That I should also read the decision" is not an acceptable answer :))

In particular, there would seem to be only one reasonable conclusion from:

"HM Revenue and Customs sought to charge SDLT at 15% on FCS’s acquisition of H." and "FCS’s appeal was allowed."

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Replying to Wilson Philips:
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By Justin Bryant
27th Sep 2021 15:06

As we all know, I seldom agree with WP (I even defend him from time to time), but we are both clearly right here and indeed I seem to have touched a nerve! The taxpayer even admitted they were liable for the 15% SDLT (which is entirely correct).

If it's any consolation I criticize CoA and SC judges here regularly for their bad judgments, so you're in good company. Just a shame Lady Arden does not come on here to defend herself.

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Replying to Justin Bryant:
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By charteredtax
27th Sep 2021 15:17

Justin

The tribunal had to consider whether the exemption from the 15% SDLT charge (which was the subject matter of my article, not penalties) applied, in order to consider if the penalty was due. The tribunal ruled that the SDLT return was correct in that the exemption was due at the time the return was filed.

I can reassure you that you haven't touched a nerve. However, I have written literally hundreds of articles, and not one of them has ever been labelled 'garbage' or offering 'duff advice'.

When I make mistakes, I will admit and try to correct them. But in this case, your descriptions of the article are offensive, and I have exercised my right of reply.

Thank you

Mark McLaughlin

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Replying to charteredtax:
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By Justin Bryant
27th Sep 2021 15:34

Mark, let's just disagree here and no nasty intention from me I assure you (I paid you a backhanded compliment above by assuming it was ghostwritten i.e. I know you're a reputable tax adviser - unlike 99% of other people here!).

You'll know that judges often like to describe tax counsel submissions in withering terms (so I'm arguably no worse than them). See paras 582 & 586 of this recent case:

https://financeandtax.decisions.tribunals.gov.uk/judgmentfiles/j12168/TC...

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Replying to Justin Bryant:
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By Tax Dragon
27th Sep 2021 15:24

Justin Bryant wrote:

Just a shame Lady Arden does not come on here to defend herself.

She probably considers she says all she needs to say in her judgments and - following your fine example - ends there.

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Replying to Tax Dragon:
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By Justin Bryant
27th Sep 2021 15:25

Then again, she could be you!

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Replying to Wilson Philips:
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By The Dullard
27th Sep 2021 15:44

You do understand how self-assessed taxes work, I take it? Presumably, HMRC were also seeking an amendment to the SDLT return, in addition to charging the offending penalty.

Also, the case synopsis, at the top, says, "Stamp Duty Land Tax - Penalty for inaccurate SDLT return - application of higher rate to high value residential transaction pursuant to Schedule 4A Finance Act 2003 - whether transaction qualified for relief as property acquired for purpose of redevelopment - YES - whether return inaccurate - no - appeal allowed", with my emphasis on the yes.

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Replying to The Dullard:
Psycho
By Wilson Philips
27th Sep 2021 15:52

You've missed my point. When I said read the article without reading the case decision, I also meant without reading the case synopsis. Reading the article in isolation, can you honestly say that you would understand what the case was about - and what the actual outcome was? If you can, then I will concede that you are far more preceptive than I am.

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Replying to Wilson Philips:
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By The Dullard
27th Sep 2021 16:13

I'd like to think that we were both pretty preceptive.

The article describes how the development exception to the 15% rate has been held to apply in a situation where non-qualifying individuals had occupied the property.

The case considers the reason that the company purchased the property and the circumstances of the director's occupation. It reaches the conclusion that the intention at purchase was to develop and not for the director to occupy. Accordingly, the tribunal concludes that the company's self-assessment return, applying the exception, was correct, and so the penalty, which I acknowledge was the subject of the appeal, was invalid.

I don't think the typical reader cares about the distinction between confirming the accuracy of somebody's self-assessment and upholding a claim to an exception; being the exception on which the self-assessment was based. Having written for publications such as this myself on occasion, it is usual to "sex things up" for the benefit of the uninitiated. It may send them scurrying off for advice from somebody suitably learned. I assume you don't want the work?

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Replying to The Dullard:
Psycho
By Wilson Philips
27th Sep 2021 16:43

How do you know that the case had anything to do with penalties? I don't see penalties mentioned anywhere in the article. All I see is a discussion about whether or not the 15% rate should have applied, a note that HMRC were seeking to charge the 15% rate but that the taxpayer's appeal was allowed. All factually correct, but highly misleading. "Sexing up" or not, I don't think there is any real excuse for the sloppiness of the article.

I'll leave it there, given your reluctance to address the specific point put to you.

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Replying to Wilson Philips:
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By The Dullard
27th Sep 2021 16:59

When I talked about the article, I didn't mention the penalty.

I only mentioned the penalty when talking about the case.

The lack of penalty follows from the conclusion that the SDLT return was correct, and so the 15% rate did not apply in the tribunal's view. It follows from that that the penalty was incorrectly charged, but I find that conclusion so unremarkable as not to require mention in the article, despite it being the matter actually under appeal.

The purpose of the article is, I believe, to comment on the principles underlying the case, by reference to the facts of the case, rather than being an analysis of the case itself.

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By ireallyshouldknowthisbut
27th Sep 2021 16:08

Its rather nice of someone of the calibre of Mark to grace our forum.

I regularly read his articles and he has taught me a huge amount about tax.

I find it odd people giving him a kicking for very professionally dealing with the matter in hand, and I guess mean he wont be back any time soon. Which is a shame, someone of his calibre would be a very welcome addition.

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Replying to ireallyshouldknowthisbut:
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By User deleted
27th Sep 2021 16:15

I agree with what you say though, after this article and his defence of it, it might be an idea to check anything he says to the source from now on.

Even dog has his day. I hope I have the wisdom to retire before my work goes down the pan.

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Replying to User deleted:
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By charteredtax
27th Sep 2021 17:51

"I hope I have the wisdom to retire before my work goes down the pan."

I hope you do too. And thank you for the career advice.

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By User deleted
27th Sep 2021 16:13

Because of the comments below, I thought I'd reach my own conclusion.

The article definitely reads as though the 15% rate didn't apply. I read it as saying that they convinced the FTT that they were within one of the exceptions from that rate.

"a claim for exception was allowed under the third bullet point above – but only just." - Well, it was accepted as valid at filing but it was later revoked.

"Lucky escape? " - From the penalty, yes - but not from the 15% charge.

Nowhere is it explained that the point being discussed was whether the exception was met when the return was filed. All in, it reads as though the exception claim was valid (and stood) even though they moved into the property in July (at which point it was accepted that they became liable for the 15%) - thus encouraging someone to think that such circumstances will fall within that exception even if "only just".

Unless I have completely misunderstood something, I too think that this article is misleading.

I'm sorry if that is "offensive" Mark or hurts your feelings (since this seems to be your concern based on two of your replies) but that is irrelevant. By all means, defend the article from technical criticisms levelled at it - but don't think that acting all hurt and upset is a valid strategy in the real world - if anything, it looks a bit desperate. It is a pathetic silencing strategy rather than one that addresses the points being raised.

Look, I envy people who can write articles on tricky subjects for a couple of hundred a pop or whatever the going rate is. I don't know how the people who are bright enough to do it motivate themselves given what they could earn giving advice. So I can forgive any issues with articles (though this one looks a bit deliberate) but not if you're going to deny they exist.

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Replying to User deleted:
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By The Dullard
27th Sep 2021 16:50

You have misunderstood. The 15% did not apply. The tribunal accepted the SDLT return was correct. Whilst Mr Smith thought that there should be a "withdrawal of the relief", he was wrong; the exception either applied at the date of the transaction or it didn't. The tribunal conclusion means that they accepted that it did apply at the date of the transaction, which I believe is what Mark's point was.

You have successfully highlighted a need for commentators to "dumb things down" though.

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Replying to The Dullard:
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By User deleted
27th Sep 2021 18:23

I thought that the 15% rate did apply in the end?

It didn't at the time of the filing - which is what the penalty argument was about and why the return was correct when it was filed - but it did apply later once they moved in and made themselves ineligible for an exception.

If the 15% wasn't charged at all then the article is great.

However, if the 15% was charged later due to them moving in (which is my reading of the case), then the article is very misleading on that point for the reasons I have set out in my earlier post.

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Replying to User deleted:
Psycho
By Wilson Philips
27th Sep 2021 16:59

Justin knows more about SDLT than most here.

I know enough about SDLT to be dangerous.

I don't know how much you know about SDLT.

But the simple fact is that three readers all appear to have the same issue with the article - it is misleading.

I am as guilty as the next person of drafting a report, knowing exactly what it is that I am writing about, but taking for granted a degree of assumed knowledge. But if someone tells me that it is ambiguous or misleading then I will make every effort to clarify it, not try to make excuses or defend it.

The fact that there are at least three readers that have the same issue should be enough to convince Mark that there is a problem with the article.

"Beauty is in the eye of the beholder"

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Replying to Wilson Philips:
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By The Dullard
27th Sep 2021 17:02

Of the three:

Justin doesn't count. Trust me.

AnnAccountant has just disqualified herself from being entitled to "having the issue" by demonstrating that she needs the simplified version.

And you just generally contrary. A regular Mary, Mary!

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Replying to The Dullard:
ALISK
By atleastisoundknowledgable...
28th Sep 2021 09:05

The Dullard wrote:

Justin doesn't count. Trust me.

;D

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Replying to The Dullard:
paddle steamer
By DJKL
28th Sep 2021 09:10

A variant on Palmerston's comment regarding the "Schleswig-Holstein Question", perhaps.

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By Tax Dragon
27th Sep 2021 17:06

I'm really not sure what point the article makes. The 15% wasn't payable initially, but so what? The 15% became payable when the directors moved in - and it's the failure of the article to mention that fact that has led to this bit of banter.

"Duff" and "garbage" are OTT; but "irrelevant" and "unhelpful" don't seem wholly unjustified. The case was decided on narrow facts and could not possibly be used for honest planning.

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Replying to Tax Dragon:
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By The Dullard
27th Sep 2021 17:12

The 15% didn't become payable when the directors moved in. Only the director thought that.

If you're going to read these things you need to separate what is a record of evidence provided - the testimony of Mr Smith - and the tribunals analysis. The return was correct, and so no penalty was payable.

Either the 15% applied or it didn't, and it didn't. There was no failure in the article to mention that it did apply because it didn't (it only applied after the fact in the mind of Mr Smith).

It just describes a principle in a particular set of circumstances, with there being the possibility that similar circumstances might arise elsewhere in future.

It's a less misleading article than those that appear in the tabloid press.

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Replying to The Dullard:
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By The Dullard
27th Sep 2021 17:19

I take some of it back!

There is provision for withdrawal of relief in Sch 4A, which did, in fact, apply in this case.

The shortcoming in the article is not mentioning the withdrawal provisions, because they did apply in the case.

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Replying to The Dullard:
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By Tax Dragon
27th Sep 2021 17:26

Wasn't Mr Smith correctly applying 5G(3)(c)?

(I should fess up that I've read the article in full but at best only skimmed the case... drawing me into discussion of the case will soon expose that, hence my up front confession.)

Edit: following your intervening comment (slow typing today, sorry): I think we are in agreement now.

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Replying to Tax Dragon:
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By Tax Dragon
27th Sep 2021 17:27

.oO I fessed up too soon! :-p)

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Replying to The Dullard:
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By More unearned luck
27th Sep 2021 19:25

"It's a less misleading article than those that appear in the tabloid press."

This damnation by faint praise must be the most severe criticism of all.

What if the article hadn't mentioned the case and had instead given a hypothetical example to illustrate the point?

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By ireallyshouldknowthisbut
27th Sep 2021 17:31

Perhaps if you are tax thick like me it helps.

I read the article as a very simple one, saying "if these things apply its exempt"

And one of those things applied, even though it ceased to apply later on, but as at the time it applied, then there was no charge.

This was confirmed in the tax case.

This mistake several commentators on here seem to be making is assuming the 15% charge applied later on due to the change of use, but it does not, as at the time it was intended as a trading asset. Which was the point of the article.

The article is not aimed at tax professionals, its in Tax Insider. Too much knowledge is perhaps cluttering certain peoples minds.

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Replying to ireallyshouldknowthisbut:
Psycho
By Wilson Philips
27th Sep 2021 18:02

I'm not assuming anything of the sort. I'm putting myself in the position of someone (eg a non tax professional) with access to the article only. It says that HMRC wanted to charge 15% but that the taxpayer successfully appealed.

I accept that the message is intended to be simple - "if these things apply it's exempt (sic)". However, in absence of any reference as to what the case was actually about, and in particular failing to mention the withdrawal of relief, I consider it perfectly reasonable for ANY reader to conclude that the author is telling us that the taxpayer was successful in completely avoiding a 15% charge.

Perhaps you would be man enough, where others aren't, and let me know what conclusion you would have reached had you read the article in isolation.

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Replying to Wilson Philips:
By ireallyshouldknowthisbut
27th Sep 2021 18:29

@WP, whilst I agree you could reach the conclusion that the charge is totally avoided in these circumstances, I didn't read it like that. Indeed I wasn't even thinking of that.

Perhaps due to my existing (limited) knowledge of SDLT.

Rereading my post above this one, you can read that both ways too. Sigh I give up.

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Replying to ireallyshouldknowthisbut:
Psycho
By Wilson Philips
27th Sep 2021 18:44

Well, it was my own existing (limited) knowledge of SDLT that led to my conclusion that there must have been something missing from the article, hence the need to read the decision itself.

The inability or unwillingness of some to separate the article and the case text leads me to the conclusion that it would be unwise to read one without the other. Which leads to the obvious question - why would it be unwise?

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Replying to ireallyshouldknowthisbut:
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By Tax Dragon
27th Sep 2021 19:26

ireallyshouldknowthisbut wrote:

I read the article as a very simple one, saying "if these things apply its exempt"

And one of those things applied, even though it ceased to apply later on, but as at the time it applied, then there was no charge.

This was confirmed in the tax case.

But if the only point of the article is to say "if these things apply its exempt", and the you select "For development or redevelopment and resale in a commercial property development trade" as the "thing" to focus your article on, and you add in the article "in [such and such case], a claim for exception was allowed under the third bullet point above – but only just", isn't it behoven to say somewhere in your article that the "exception" was subsequently withdrawn? What does "only just" mean?! Nothing! At the time of the claim, the conditions were met - exception available; later they weren't, exception ceased. Whoopie doo.

I'm not defending Justin nor criticising Mark. But I do wonder... have you also misinterpreted the article? You do realise that the 15% charge was paid?

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Replying to Tax Dragon:
Psycho
By Wilson Philips
27th Sep 2021 20:07

I liken it (admittedly far from being a perfect analogy) to my writing an article on the availability of a certain ATED relief, and citing Heacham in support.

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ALISK
By atleastisoundknowledgable...
28th Sep 2021 09:19

My knowledge of SDLT is probably somewhere nearer Jo Public than Mark’s/Justin’s . Certainly no better than a successful small time property developer/investor. Bearing that in mind, I have just read the article only and tried to put out of my mind this thread.

My reading of the article is that it’s not so much about the specific case, more that it’s used as an example of the exemption (if that distinction makes sense). I took away from it that HMRC wanted to apply the 15% charge, but because of the intention at the time of purchase and time of submission of the SDLT return, the property purchase was exempt from the charge. And this is what happened in the FCS case.

From his answers, I think that I’ve read the article as Mark intended and probably with a knowledge level similar to his expected audience and (without being rude) like in both respects ireallyshouldknowthis

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Replying to atleastisoundknowledgable...:
Psycho
By Wilson Philips
28th Sep 2021 09:32

atleastisoundknowledgable... wrote:
I took away from it that HMRC wanted to apply the 15% charge, but because of the intention at the time of purchase and time of submission of the SDLT return, the property purchase was exempt from the charge.

And - honestly - did you take away from it (or would you have done without having read the case) that the 15% charge was in fact levied?
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Replying to Wilson Philips:
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By charteredtax
28th Sep 2021 10:49

Why is that relevant, in an article with the sole purpose of highlighting the existence of the exception for non-expert taxpayers, when the tribunal accepted that the exception applied when the SDLT return was submitted?

I have written a separate post clarifying this point, among others. Please feel free to ignore it at your leisure.

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Replying to charteredtax:
Psycho
By Wilson Philips
28th Sep 2021 11:10

The problem, Mark, is that whaatver the sole purpose was in your mind, that sole purpose is far from clear in the article. I have explained in that other thread that if the sole purpose was to highlight the existence of the exception you could have done so much more effectively with no, or only a passing, reference to the case.

Yes, the tribunal accepted that the exception applied when the return was submitted. But the failure to mention that the relief was then withdrawn is a glaring omission. You may well know what the purpose of the article was. However, the casual reader may be excused for thinking that the article was about a particular case, the decision and the ramifications thereof. (And leaving with an incorrect understanding of those ramifications).

You are clearly not willing to acknowledge your shortcomings (despite earlier claims that you are willing to accept constructive criticism). The simple truth, though, is that the article is misleading and your refusal to accept that doesn't change the fact.

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Replying to Wilson Philips:
ALISK
By atleastisoundknowledgable...
28th Sep 2021 10:59

Ignoring everything except my reading of the article, in my mind the 15% was not levied.

TBH (I've not read the case) from this thread I still don't know whether it was or not!

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Replying to atleastisoundknowledgable...:
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By charteredtax
28th Sep 2021 11:06

The 15% charge was applied due to the taxpayer's change of intention. But as I have already explained, the purpose of the article was to highlight the existence of the exception, and indeed the tribunal accepted that the company was entitled to claim the exception when the SDLT return was made.

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Replying to charteredtax:
ALISK
By atleastisoundknowledgable...
28th Sep 2021 14:26

charteredtax wrote:

The 15% charge was applied due to the taxpayer's change of intention. But as I have already explained, the purpose of the article was to highlight the existence of the exception, and indeed the tribunal accepted that the company was entitled to claim the exception when the SDLT return was made.

I'm sorry to say that - whilst I understand your point - I too believe this article was fundamentally misleading. I can already picture clients ringing me with "I've read this article ... can I just pretend that this was the intention, then live in the house anyway and not pay the 15%?".

There should have been a sentence at the end which said something like "If this is no longer the case - for example the directors move into the property as happened in FSC - the company loses the exemption and became liable for the 15% higher rate at that point time". Then everyone (except Justin) would've been happy enough.

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