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UK Tax Agency Welcomes Stamp Duty Avoidance Ruling

by Jason Gorringe,, London
Monday, March 13, 2017

A UK tax tribunal has ruled against a Stamp Duty Land Tax (SDLT) avoidance scheme used by house builder Crest Nicholson, in a landmark decision that is likely to have an impact on more than 700 other cases, potentially protecting GBP65m (USD79m) of taxpayers' money.

Under the First-tier Tribunal ruling (Crest Nicholson and others v HMRC [2017] UKFTT 135), Crest Nicholson, a FTSE 250-listed company, will have to pay GBP1.3m.

HM Revenue and Customs (HMRC) challenged what it termed "artificial and complex arrangements" intended to avoid paying SDLT on three purchases of development land near Rochester in Kent for a total of more than GBP32m.

The avoidance scheme tried to use the transfer of property between two sub-companies to avoid SDLT.

Crest Nicholson argued that HMRC didn't have a legal right to make assessments of the tax due because it was out of time to do so, and that it had not carried out its assessments properly.

The judge disagreed with these arguments and found HMRC had acted correctly throughout.

The judgment reflects HMRC's tribunal victory in the Vardy case (2012), when it challenged a similar SDLT avoidance scheme based on complex sub-sale arrangements.

"This decision makes it clear that setting up artificial and complex arrangements involving sub-companies to avoid paying tax doesn't work," said HMRC's Director General, Customer Compliance, Jennie Granger. "It's another important success that's protected taxpayers' money. This win sends a clear message that tax avoidance is expensive and self-defeating."

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