The legal campaign against tax relief changes for buy-to-let landlords has progressed to the next stage.
Two landlords, Steve Bolton and Chris Cooper, are set to challenge the government in court on behalf of 737 campaign supporters and 250 Platinum Property Partners.
They said that legal opinion from law firm Omnia Strategy LLP, led by Cherie Blair QC, has confirmed that the campaign has a ‘reasonable chance of success’.
Following a successful fundraising stage, where the target of £50,000 was raised via the Crowd Justice website, the legal team has now issued a Pre-Action Protocol Letter to HMRC. The letter, which has been issued on behalf of co-claimants Bolton and Cooper, calls for a Judicial Review of the government’s policy change announced in the Summer Budget 2015 which restricts buy-to-let mortgage interest tax relief from April 2017.
The government must respond to the letter by Wednesday 10 February.
The new policy (Section 24 of the Finance Act 2015) will prevent landlords with mortgages from offsetting mortgage interest costs against rental profit before calculating tax.
The legal challenge is being made against the new policy on the basis that it breaches the European Convention on Human Rights, and it constitutes unlawful grant of State aid to corporate landlords and to the owners of commercially let holiday homes contrary to articles of the Treaty on the Functioning of the European Union.
Bolton said: “This tax grab is unfair, undemocratic and underhanded, and we believe it is unlawful on a number of points. In no other business are costs wholly incurred to fund the business liable for taxation. In addition there is no substantiation in the government’s proposal that the changes will create a level playing field between homeowners and buy-to-let landlords.
“The change discriminates against the typically smaller landlord who may incur effective tax rates of over 100% while making an economic loss, and gives an unfair commercial advantage to many other categories of landlord unaffected by the change. We are therefore delighted that our legal challenge has progressed to the next stage and look forward to receiving the government’s response.”