An attempt to have Stamp Duty Land Tax (SDLT) anti-avoidance rules declared unlawful has been rejected by the Court of Appeal.
The Chancellor stated in the 2012 Budget statement that he would act retrospectively against SDLT avoidance if necessary. Nevertheless, some property buyers continued to use tax avoidance schemes to try and avoid their liabilities. When this avoidance continued, the government brought in legislation to close schemes down.
The Blackfriars scheme – devised by chartered accountants Blackfriars Tax Solutions LLP – was one such scheme and some users of the scheme challenged the government’s action through a judicial review. They claimed that the government’s actions represented an abuse of their rights under the European Convention on Human Rights to a fair trial and to protection of property.
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.”
Jim Harra, director general for Business Tax, said: “HMRC and HM Treasury moved fast and effectively to defend anti-avoidance rules and counter a blatant attempt to avoid paying Stamp Duty Land Tax.
“This ruling puts all users of such schemes on notice that the legislation works as intended to stop these abusive schemes in their tracks, and we won’t hesitate to enforce the rules.”