There are some things you can count on in tax – like the law taking effect from the day it is passed, or occasionally from the day the Chancellor announces the change. That is no longer the case with SDLT, as we explain below. We have advance warning of a new charge and a new registration scheme which certain retailers and wholesalers may need to comply with. There are also current and future issues with corporation tax filing software.
When your client purchases a new home you may not be involved in the transaction at all. The conveyancing solicitor will handle the land registration and SDLT forms, and in the past some conveyancers offered schemes to avoid paying the SDLT.
If your client took up such a SDLT avoidance scheme you need to talk to them about HMRC’s new position on SDLT avoidance, as set out in Spotlight no. 25. HMRC are advising taxpayers who have used any SDLT avoidance scheme to contact them without delay and pay the SDLT liability due. There is likely to be interest due on any late paid SDLT, but the taxpayer may get away with a zero or low penalty if they make a full disclosure before HMRC approach them.
Your client may protest that the SDLT scheme they were sold was “water tight” and no tax cases have been taken to prove it doesn’t work. That may be so, but the Government can change the tax law with retrospective effect, and the case of APVCO Ltd has shown that taxpayers have no grounds on which to argue against that.
On 21 March 2012 George Osborne announced measures to block various SDLT schemes and said that similar schemes would be blocked when discovered. Anti-avoidance legislation was included in FA 2012 and FA 2013, with both sets of provisions back-dated to take effect from 21 March 2012. So where your client tried to avoid SDLT on or after 21 March 2012, they will now have to pay up.
This is an
extract from our tax tips newsletter dated 27 August 2015. You can obtain future issues by registering here>>>
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