Stamp Duty Land Tax avoidance: no human rights breach in avoidance challenge (Spotlight 25)
Published 20 August 2015
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The Chancellor announced in 2012 that HM Revenue and Customs (HMRC) would use retrospective legislation to close down SDLT avoidance schemes. This was due to the growing use of Stamp Duty Land Tax (SDLT) avoidance schemes.
Despite this warning, some avoidance scheme users continued to abuse the transfer of rights (or sub sale) rules. As a result, the Chancellor introduced legislation to close down those schemes.
The Blackfriars scheme was one such SDLT avoidance scheme. When the government closed down the scheme, a number of its users claimed the European Convention on Human Rights was invoked. They believed the government’s actions represented an abuse of their property rights and right to a fair trial.
The Court of Appeal unanimously refused an application for a judicial review against SDLT retrospective legislation. This was introduced in 2013 and applied retrospectively to 21 March 2012 APVCO 19 Ltd & Ors, R (on the application of) v HM Treasury & Anor [2015] EWCA Civ 648 (30 June 2015).
Lord Justice Vos said
The government had made it perfectly clear that SDLT avoidance schemes would not be tolerated, and that retrospective legislation would be used to achieve that objective. The appellants can have been in no doubt about any of that, before they decided to take advantage of a scheme devised purely to circumvent the precise wording of section 45(1A) as it was before the legislative changes.
The consequences of the legislative changes were summarised by Lord Justice Vos as:
i. The appellants’ schemes do not work, so their argument that the original sale transactions were not subject to SDLT is rendered unsustainable.
ii. In consequence, the appellants will have to pay the SDLT due on their original sale transactions.
This is further success for HM Revenue and Customs (HMRC) who have a 100% record in defeating SDLT avoidance schemes.
HMRC strongly advises anyone who has used an SDLT avoidance scheme to make contact. To discuss how they can withdraw from their scheme and settle their tax liability.
A number of SDLT avoidance schemes users have already chosen to disclose and settle with HMRC.