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.