

Introduction:
For purchases in excess of £500,000 SDLT is raised at a rate of 4%, which
is a lot of money. We do have planning opportunities open to us that can reduce
this - by utilising legislation that can be examined and tested.
These arrangements are being used successfully on a very large scale and are
not "tax evasion" or other attempts to bend the law. Through this planning
SDLT is reduced or even eliminated.
How Does HMRC Assess SDLT?
Upon completion of a purchase, your solicitor completes and submits an SDLT1
to the stamp taxes office, declaring how much SDLT you are paying. This is
a self-assessment, but using a stand-alone return (SDLT1) relating solely
to this tax.
HMRC then have nine months the raise an "enquiry" if they wish, regarding
a return made. This nine months or "enquiry period" is defined by statute
in the Finance Act specific to SDLT. Upon expiry of the enquiry period, an
enquiry cannot be made unless HMRC prove fraudulent or negligent activity
in the return.
In order to ensure that an enquiry cannot be raised after nine months due
to fraudulent activity, your tax advisor would gain a favourable opinion from
counsel. As you sought advice from the bar regarding the strategy, you cannot
be accused of fraud or negligence, so an enquiry cannot be raised after nine
months.
However, counsel will not give favourable opinion if they believe the planning
will not stand up in a court of law if challenged.
So, the opinion serves to state that, the planning is both legitimate and
will, in all probability, also succeed if challenged in court. Therefore after
expiry of the enquiry window the planning is successful and the SDLT paid
is the required amount. If HMRC make a successful challenge (although unlikely
in the opinion of Counsel), you would have to pay the SDLT that would be charged
without planning and any interest for late payment.
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Please note: We are not investment or pensions advisors, so anything you
read on this web site should not be taken as formal investment or pensions
advice.